Take advantage of what you can control
Farming is a financially risky business, especially today. The agricultural community in Wisconsin and across the country has been squeezed by declining commodity prices and rising costs for the past several years. Consider two prominent state agricultural products that have been subject to this, among others: Corn prices have dropped 38 percent since mid-2014, from $5.74 a bushel to $3.56 today. Milk prices have fallen from about $25 per hundredweight in mid-2014 to $15.25 today, also a drop of 38 percent. The U.S. Department of Agriculture estimates that net farm income fell by half between 2013 and 2016.
While a big part of farmers’ identities is self-reliance, to protect their livelihoods in these tough times many are working collaboratively to become more efficient and lessen their risks. This includes establishing joint ventures, carrying out mergers and sharing resources. While these activities, too, involve some hazards, they are ones over which farmers have more control.
Here are five common farming pitfalls and tips for avoiding them:
Negotiating is involved when hiring employees, buying or leasing equipment and distributing products. Approaching any negotiation with a cool head, the relevant facts and the right assistance means the difference between making a good deal or a bad one. The state Department of Agriculture, Trade and Consumer Protection’s (DATCP) Farm Center offers farmers and their families a variety of resources in this area including consultants on the economic needs of farms, mediation services for disputes ranging from credit issues to environmental concerns and family conflicts, and written guides on working with lawyers.
Nothing is more changeable than farming. There are variables you can’t control, such as fuel or fertilizer costs. But you can control the agreements you make with your partners. It’s important to regularly review and evaluate these partnerships. What worked last year may not work this year. Your farm or agribusiness may have grown; your cost structure may have changed. You can best manage your expenses and maximize production by reviewing your options and talking to your partners. Also, make sure you document your agreements, even if you’re dealing with someone you’ve known for years. Having a written document is critical to resolving any issue without spending too much time, energy and money.
3. Emotion-driven decisions
Letting emotions rule your decision-making is a recipe for bad deals. Particularly during these challenging times, it’s easy to become frustrated and overwhelmed. That’s when it’s most important to step back. Try to review the situation from every angle and then reach out for a fresh perspective and some outside advice available from the Farm Center or other resources. Wisconsin is one of six states that maintains a list of behavioral health counselors who are knowledgeable about farm-related issues and offers vouchers for counseling sessions. This support is available through the Farm Center at 800-942-2474.
4. Going it alone
A variety of farming organizations exist to advocate for specific groups of farmers and to provide certain types of assistance. The broadest and largest organization in the state is the Wisconsin Farm Bureau. Members have access to a variety of benefits such as discounts and rewards programs that can provide valuable assistance.
Even though you are reading this on an insurance website, it’s still true that having the proper farm coverage can keep you afloat if something unexpected goes wrong. With so much out of your control, the right insurance provides a safety net that can mean the difference between success and failure in these turbulent times.
Rural Mutual is the #1 farm insurer in Wisconsin. We review risk for a living. We also see the passion and drive that characterizes farmers throughout Wisconsin. Let us help you avoid pitfalls. Contact your local Rural Mutual agent today for additional tips and insights specific to your community.