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Betsy's Blog

Sometimes pessimistic, mostly optimistic, always realistic.

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Back in farm business management

8/16/2016

7 Comments

 
Little Carrie is off to preschool this year.  Three days a week she’ll get on the bus, hopefully smiling, with her little pink backpack, and she’ll spend the day asking someone else a million questions.  I appreciate her desire to understand, but no, I don’t know why shark skin is so scratchy.  I wish her teachers the best of luck, and will pray for patience. 

It seemed like the perfect time to get an off farm job.  I’m back at work in farm business management at Northland Community and Technical College. It’s the same job I had 4 years ago.  Some familiar faces, a few new faces, and a new office.  It feels good to be back. 

I wish I could have returned to FBM during better financial times.  When I left in 2012, farm finances were strong.  Cash flows actually worked the first time you entered numbers.  My last year of analysis was 2011, and average rate of return on assets (ROA) was 12.1% in the Red River Valley. In 2015, the ROA dropped to 2.2%.  For perspective, in 2015 farmers were borrowing money from the bank around 5%, and getting a return of 2.2%.   That is not a sign of good financial health.

It appears the 2016 crop year will be similar to 2015.  USDA projected record yields in their August report. That’s great news for production.  They also projected the average price of wheat would be $1.19/bu less than 2015, and corn would be down $.45.  Soybean prices may be similar to last year, so let’s cross our fingers on that one.  

I’ve always been a numbers nerd. I love spending time calculate our farm’s ROA, cost of production, and updating cash flows.  Yes, I love numbers.  That is not the case for most farmers.  Most farmers love being in the field, and dread those necessary office hours.  

My job is to try and teach farmers why numbers are so important.  Young and old, big and small, nearly every farmer could use a kick in the pants for farm business management.   Farmers love bushels, but I argue that numbers are just as important.  Is your debt structure appropriate?  Is your cost of production in line with your peers?  Can you afford that new grain bin?  How much can you pay for rent?  How about developing a marketing plan? All questions I will help calculate and answer over the next few months.

Farming was much easier back in 2011.  The good news is that in 2016 farming is still a great career, and a wonderful industry.  There’s nowhere else I’d rather be.  And now I get to help farmers become better managers, and better positioned for future.  It feels good to be back.   You may never love numbers as much as me, but I do hope to make you appreciate and respect the numbers. 

7 Comments
ADawn
8/16/2016 10:15:12 am

Oh Betsy.... now you can say your the old ADawn, like I was the old Betsy .... LOL I am so glad you came back!

Reply
Nick Horob
8/16/2016 11:54:15 am

Congrats....I think! Going to be some ugly numbers this fall but it is what it is

Reply
Betsy
9/1/2016 05:40:58 am

You know the numbers won't be good, but that makes our jobs even more important.

Reply
Bob Roesler
8/31/2016 08:29:51 am

This is GREAT news for FBM.....welcome back!!!

Reply
Betsy
9/1/2016 05:39:41 am

I hope to see you soon Bob! Feels good to be back.

Reply
Henry Killingsworth link
4/12/2023 12:13:08 pm

It was interesting to me when you mentioned that numbers are really important for farmers. I would imagine that some farmers struggle to be efficient because they aren't good with number management. Implementing some kind of software program that helps with management would probably be a good idea for these farmers.

Reply
Effective business management link
1/24/2025 10:04:31 pm

Effective business management really comes down to strong leadership and communication. When everyone is on the same page and motivated, the whole team can work together toward common goals.

Reply



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    This is what I get for majoring in agriculture economics at North Dakota State University.  A farm near the Canadian border, far from any delivery restaurants or shopping centers.  Sometimes in life you get nothing that you prayed for, and yet so much more than you asked.  Life doesn't have to be easy to be wonderful and blessed.

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