Looking to boost your farm’s income over the next few years? You can always hope for higher commodity prices – although things have been softening up there recently so that might not be a winning strategy. Unlike some other businesses, farmers generally don’t get much input in the prices they receive for their products. So improving the farm’s bottom line generally means either making and selling more product, or cutting costs. Here are a few ideas for doing the latter.

Tip 1: Go Organic

Organic farming techniques are more labor-intensive, but zero out some of your largest line-item costs. No pesticide spray passes, no weedkiller applications – it adds up. If you’ve got more time/hands than you have work, and less money than you have bills, a switch to organic production methods can make hard financial sense.

Tip 2: Let Mother Nature Feed Them

If you’re maintaining a dairy herd, consider moving to natural pasturage rather than confining your herd and providing the feed. This interesting article details some of the findings of research around grazing, and it may surprise you. The conventional wisdom is that naturally grazed cows produce less milk – and they do. The surprising part is, they don’t produce much less milk – and the net financial output per cow is as much as two or three times higher, even after taking into account the increased management work of keeping track of pasturage and moving animals around.

Natural grazing doesn’t just mean letting the herd out onto the first open field you see and trusting to luck – you’ll need to understand what your soil conditions are, ensure that there’s enough nutritional energy in the available forage, etc.

Tip 3: Get Bigger or Change Businesses

The simple truth is that for conventional farming techniques, small herds lose money. If a herd has less than 500 animals, then you’re not likely to be at the break-even point for your fixed operational costs. If you can expand into the profitable range, then that might be worth looking into. If you can switch to organic production, that’s one way to keep a small herd viable. Otherwise, sell your small herd and the associated equipment and use the money to optimize your other farming activities.

Tip 4: Get a New Lease on Life

If you are leasing your land, one way to cut costs is to change the terms of your lease. Rather than a cash arrangement, consider going to a share-lease arrangement. The downside is that if you have a great year, you don’t keep all the profits – but the upside is that a portion of your operational costs get charged to the landlord instead of to your bottom line. If your farm steadily makes a profit, this is a bad option – but if like most farmers you have good years and bad, then a share-lease can make the bad years much more survivable.

Turning a profit is the goal of every farming operation large and small.  In times like these, when the cost of daily inputs are skyrocketing, it is more important than ever to be as profitable as possible.  The most obvious step is cutting costs.  The tricky part is cutting costs while maintaining quality and ample productivity to keep the whole business functioning cohesively.

Here are a few ideas to help you get lean and mean…

1.       Do you really need to own it?  Let’s face it, most people are not very big on sharing.  You may be surprised though how much good it can be to share which cuts your capital expenditure.  Owning a lot of specialized equipment is expensive.  When you consider operating, maintenance and purchase costs, it’s a lot more than you think it is.  Now take that same piece of expensive equipment and share it with your neighbor and/or father in-law, the numbers aren’t quite so painful.  To be on the safe side, it is always a good idea to have something in writing should there be any confusion as to who gets it when and for what explicit purpose. 

2.       To till or not to till?  This is a topic that could be argued over for days.  From the cost cutting perspective though, it is one of the best things going - for your wallet as much as the environment.  Not tilling saves about 3.5 gallons of diesel per acre.  Based on a 1,000 acre tract of land and today’s diesel prices of about $4.50 per gallon that results in a $4,5000 savings.  (Try this calculator for your farm: Clink Here to Launch Calculator )

3.        Plant a tree!    It may not seem like a lot but just planting a trees and shrubs can save you boatloads on heating and cooling costs in addition to providing wind breaks to reduce erosion.  During the summer you get shade and during the winter trees function as a natural and attractive windbreak.  Evergreen trees like cedars are ideal because they have flexible limbs and are resistant to wind damage that may occur with more brittle types of trees.  Evergreen’s also produce very little mess and grow in a variety of soil types. 

4.       Managing the muck.   Every year huge amounts of money is poured into the soil as fertilizer.  All the while, the manure heap at the barn grows and grows producing it’s own realm of problems.  Cure both problems and reuse the manure as field fertilizer.  By using manure as fertilizer, you can cut costs by up to $85 an acre based on a 1,000 acre tract.  (Source: NRCS)

5.       Use Precision Ag.  New technology has proven useful to the farmer as well as the techie.  (The boys at NASA are actually behind this idea, hunting for a practical application for satellite technologies).  GPS (Global Positioning) Technology has been tailored to provide farmers with an accurate aerial view of crop land.  By doing this, input needs can be more accurately estimated, as well as sowing density.  The big idea is to be more flexible in crop management.  Considering the money and expertise involved in this endeavor, it is important to work closely with others in the area to make it a benefit across the board.  (http://southeastfarmpress.com/mag/farming_precision_agriculture_study/)

These are just a few ideas to help you cut some costs and maximize profits. Feel free to add some other cost cutting tips to the comments below.  Good luck!