Farm incomes have been in significant trouble for a while now and, with incomes set to plummet a further 9% through 2020, it’s fair to say the crisis is reaching boiling point. Farmers in prime spots like southwest Minnesota, especially, have no choice right now but to cut costs or face closure.
It’s a shocking reality, and it’s one that you aren’t alone in facing with fear. Sadly, even farmers attempting to make changes are falling down in the current market. To some extent, this is no one’s fault but governments, yet many farmers aren’t helping themselves get back on stable footing.
That’s because, where changes are concerned, they’re focusing on things such as seeds, chemicals, and the like. Indeed, saving costs in these areas can help, but as incomes continue to plummet, focus should shift to more expense-laden areas such as machinery.
Machine and labor costs alone come in at around £288 to £593 per hectare and thus account for as much as 25-30% of agricultural wheat-growing costs. That’s a significant setback, and cutting expense here in the following ways could well be farmer’s only chances to stay afloat despite everything.
Always work out machine value
Too often, farmers fall into the trap of assuming they need a full machinery inventory. Yet, as many are finding, instead considering the value and potential profitability of each item could prove more effective. So,think hard about how much you spent on each piece compared with resale values and the amount of money/use they get. Once you’ve done that, don’t be afraid to sell less valuable pieces and instead rent or borrow them when you need to moving forward.
Cut back on repairs
Machine parts across the industry have also increased dramatically in price, meaning that repairs are another significant financial concern. In fact, a broken tractor could set back profits for a good few months at this stage. Cutting back on repairs where possible is, therefore, essential. The best hope farmers have of this is to invest in large bay farm sheds that ensure such items are always safe from the elements when not in use. Getting into a regular maintenance schedule can also prove invaluable for helping farmers to get the most from every piece of equipment they own at all times.
Don’t be afraid to spend upfront
Given how pricey machinery has become, many farmers also fall into the trap of either buying second hand, or even attempting to rent machines that they need for regular use. These methods can certainly save money to start, but they’re significant financial mistakes in the long-term. Ultimately, rentals on equipment required at all times will escalate above upfront prices in a matter of months. And, second-hand equipment will soon lead to those repairs we’ve already spoken about. As such, it also pays to remember that, as long as value is taken into account ahead of time, biting the bullet and buying machinery is actually the best way to level costs here at last.