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Building a resilient farm

By Chris Zoller, Ohio State University Extension Educator, ANR, Tuscarawas County

The word “resilience” is used often in the agricultural press. What does this mean? Merriam-Webster defines resilience as: The capability of a strained body to recover its size and shape after deformation caused especially by compressive stress.
An ability to recover from or adjust to misfortune or change.

We often see resilience used in agriculture when discussing climate and weather. There is documented evidence of weather changes that have impacted agriculture, and farmers have done their best to adapt to these changes. Examples include building soil health, managed grazing, the use of cover crops, water management strategies, technology adoption, and more.

Resilience can also be used when discussing the economics of agriculture and the resulting effects. It is no surprise to anyone in agriculture that people are strained, are experiencing stress, and are trying to adjust to new and different ways of operating. Here are some strategies to be economically resilient.

Mission statement
A mission statement is a short description of the fundamental reasons your business exists – its critical purpose. The statement aligns what the business says it does, what it actually does, and what others believe it is about. The statement reflects the underlying values, goals, and purposes of the business.

Example mission statement:

“The mission of Brown Family Farms is to produce high-quality crops in sufficient quantity and quality to provide a good standard of living for our family and employees. We believe a farm is the perfect environment to raise a family and strive to have the farm remain a viable business for future generations.”

Set goals
An acronym commonly used to describe goals is SMART. Goals must be Specific, Measurable, Action-oriented, Realistic, and Timed to be useful management tools. As you develop goals, it may be helpful to divide them into personal, production, and operational categories.

Goals should be:

Specific — and focus on a specific problem or need

Measurable — to have some means of tracking achievement

Action-oriented — action is the pathway to achieving goals

Realistic — aim high, but keep goals within the realm of possibility

Timed — to include a realistic completion date

Know your cost of production
Do you know the true costs to produce every acre of a crop, every pound of milk, every ton of hay, and each pound of meat? Are there some crops or livestock that make more money than others? Are there some acres that could be converted to a use that provides a higher net return? How does your farm compare with the established farm financial ratios? An in-depth financial analysis can help answer these and other questions.

Visit the Ohio State University Extension Farm Profitability Program (https://farmprofitability.osu.edu/) for additional information or to enroll in the Benchmarking Program.

Postpone major capital investments
Most everyone is already doing this, but it is a good idea to assess what investments are necessary, how urgent these needs are for your farm, and the cost of these investments. Do you really need to buy a new piece of equipment? Could you accomplish what is needed by hiring someone or renting the equipment? If you need to make a major capital investment, consider not only the initial cost, but the associated “DIRTI 5” – Depreciation, Interest, Repairs, Taxes, and Insurance that must be accounted for after the purchase.

Restructure debt
Discuss with your lender opportunities to refinance or restructure debt. Do you have short-term liabilities that could be moved to intermediate notes to improve cash flow?

Evaluate expenditures
Analyze your expenses to see where you might be able to trim costs without sacrificing production. For example, can you reduce your seeding rates to reduce costs? Ohio State University Extension has been conducting on-farm research to evaluate corn and soybean seeding rates. Contact your Extension educator or review the trials reports here https://digitalag.osu.edu/efields/efields-reports. Dairy farms will find helpful information and cost-control considerations here https://dairy.osu.edu/.

Talk with your nutritionist, agronomist, Extension educator, and other experts to evaluate inputs and expenditures. Do you need every ingredient in your ration? Do you need a seed variety with every available trait?

Reduce family living expenses
The Bureau of Labor Statistics data from 2018 indicate average family living expenses equaled $61,224 annually. A February 2019 article published by the Center for Farm Financial Management at the University of Minnesota show a family of three averages almost $64,000 annually in family living expenses before paying income taxes or making other non-farm capital purchases and investments. Are there “extras” that are costing too much? Evaluate what you want versus what you need as a family.

Consider non-farm income
The current pandemic may make finding off-farm employment more difficult, but there are opportunities. Look in the local newspaper, conduct online searches, let family and friends know you or a family member could use help finding employment. Calculate how much you need to earn at an off-farm job.

Seek opportunities to be entrepreneurial
Challenging times might not seem like the opportunity to get creative and extend the current workload further, but there likely are tangential opportunities to your existing business that meet the needs of the community. Maybe that is offering storage facilities, tree trimming, bookkeeping, or other enterprises. This can reenergize someone in a time when it is easy to feel down and creates a productive diversion. Some of the best creative work in this country came from a less than opportune economic environment.

Don’t be afraid to ask for help
To say that operating a farm business in today’s environment is a challenge is an understatement! There are plenty of people who want and are available to help you sort through the complexities, answer questions, and provide guidance to help you succeed.

References

Bureau of Labor Statistics, Consumer Expenditures – 2018, https://www.bls.gov/news.release/cesan.nr0.htm

Characteristics of Financially Resilient Farms, University of Nebraska, https://cropwatch.unl.edu/2018/characteristics-financially-resilient-farms

Developing Goals for the Agricultural Business, Ohio State University Extension, https://ohioline.osu.edu/factsheet/anr-45

Family Living Expenses Add Up, Center for Farm Financial Management, University of Minnesota, https://finpack.umn.edu/family-living-expenses-add-up/

Whole Farm Planning Model, Ohio State University Extension, https://ohioline.osu.edu/factsheet/anr-52

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