Farmers are now faced with numerous problems. For one, they have higher input costs due to rising costs associated with feeds and fertiliser. However, on the other side of the coin, they have higher expected revenues from an increase in retail spending. No one is 100% certain how the newer administrations policies are going to impact consumer spending along with farm labour costs. Because of this, a lot of farmers might need to use cost-cutting measures to keep themselves in a good spot.
To completely make the most out of the newer and more uncertain economic environment, you will need to look for ways to be creative in reducing your expenses. As you go over and review your budget, you should be asking yourself numerous questions to ensure that you’re cutting wherever possible.
Is The Expense Needed?
This is one of the most important questions that you need to ask yourself when viewing whether or not it’s essential. You need to figure out if the investment or the expense is necessary for you to hit your long term goals. Think about things that are fundamental to move your business forward. Don’t simply think short term and factor in what you need right now. Think about what you want your business to look like years down the road.
For instance, you might find that your feed and stock are necessary to continue spending on or you need new milking equipment. However, you might also find that investing in efficient and effective equipment and infrastructure upgrades is just as important. This can be especially true if you are planning on selling your business at any point. You should always have a long-term view when you are thinking about cost-cutting.
Is The Expense Something Controllable?
You want to figure out whether or not the expense is controllable. The truth is, not all expenses are controllable. You want to ensure that you are looking at these variable expenses and factoring them into your budget. While you may need a lot of these things, it doesn’t mean you need to consume them at the rate you are doing so. This can include different things like gas and more.
What Is The Timeline Of The Expenses Effect?
This is something you need to consider, as well. You need to understand the timeline of expected returns from the investment or expense. There are plenty of things that you can do to cut costs that aren’t going to yield returns for a while. Think about how soon cutting the expenses will begin to save you money. Things like cutting fertiliser use are going to provide you with immediate and noticeable benefits. Whereas, other things can have much slower returns, but will continue to build over time.
Here Are Some Of The Top Ways You Might Be Able To Save Money In 2021:
Look At Your Seed Traits and Sourcing
If you are a farmer that plants grow crops, you will want to consider whether or not you need the highest tech hybrids. While you will certainly find that some traits offer yield protection, not all of them are going to contribute to yield growth. A lot of times, sticking to 1 or 2 traits can be a good way to maintain profitability without having to pay for the newest genetic releases. Also, if you are looking at simpler varieties, you will want to shop your seed sourcing. You can generally find a lot of big cost savings by opting for another supplier.
When you are looking to save money, try to negotiate high cash rents. If you are someone that is experiencing higher than normal rent costs on fields, you need to consider whether or not they are worth it. Think about whether or no you can find a less expensive field or get rid of the field altogether. While it could be a fairly major change, it’s something that can help you boost your margins by reducing production costs.
Improve Your Conservation Management Efforts
You will want to try to improve your management practices of everything from irrigation to crop residue and even integrated pest management. All of these things can be done without negatively impacting your farm system.
You can minimize your energy costs by switching to solar power. You will find that solar systems have come a long way when it comes to their effectiveness and efficiency. Solar power offers plenty of benefits that come with utility savings and they can even turn into a revenue source for yourself by selling the power back to the grid. You can put your livestock barns and buildings to work while simultaneously controlling variable utility costs and even add a new revenue stream to the mix.