The economic recession isn’t fun for anyone, but for farmers it can be particularly tough. We’re already in a cyclical business; it doesn’t help to have the financial system in chaos on top of that. Many farmers have had a few good years – hopefully that has provided some cushion for hard times ahead, but it’s a common temptation to think that good times last forever. They don’t always, and it’s important to be able to adjust to conditions as things change. I saw a collection of good financial advice for farmers on dealing with this financial bump; here are some of the high points.

Input costs and rents are both way up – but it’s possible to find deals even today, particularly with suppliers also feeling the pinch. Shop around for your input needs, and prepare a detailed cash budget for the year to ensure that you aren’t biting off more than you can chew. If you’ve been keeping N levels on your land high, then you might be able to get away with a light application this year – check N prices in your area and if they are high, this may be a more attractive option.

Get your books straight – know your cash flows, your current balance sheet, and most importantly, your real costs of production. If you know your cost of production, then you will know if a particular marketing opportunity makes sense. If you find a selling opportunity that turns a profit, lock it in – and take the same approach for input costs as well.

Carefully document your yields – that will lay the groundwork if you have to make a crop insurance or SURE claim this year. Also, check the newest farm bill – you may be eligible for additional SURE payments. This might be a good year to enroll in ACRE (Average Crop Revenue Election), which lets you use a gross revenue protection plan instead of the price counter-cyclical program.

This is probably not the right time for major capital investments – if you can put off an investment, do so. Wait until you’ve firmed up your margins – if you’re not doing really well, then try and squeeze by with what you’ve got on hand rather than increasing capital stock. Keep cash on hand as much as possible. This is also a good year to let your accountant cut loose – try and put off your tax bills as long as possible.

A recession can be a pretty reasonable time to borrow, if you need the cash flow – interest rates are low and banks are hungry to make reliable loans. Don’t borrow for the sake of borrowing, but if your cash reserves aren’t adequate, it isn’t going to get any cheaper to borrow.

If you aren’t a “finance guru”, consider expanding your knowledge with a financial management course at your state ag school – many now have online courses that you can take 100% at home.