Here are the ‘Top 5’ recommendations for producers from Pinion advisors when starting your year-end planning process:
- Tie out your budget to actual. Most people have a budget. But just as important as setting and working the budget is taking time to tie it out at the close of the year. This helps you understand what really happened on the farm. What crops made or lost money, which pieces of equipment required continual maintenance, where could you scale back in overhead? These data points help you make changes on the operation for the next year – resulting in better margins.
- Dig into your prepays. Once you’ve tied out your budget and analyzed the prior year’s input and expenses, you can better project the next year’s needs and focus on prepaid supplies and equipment. This helps with planning, ensures availability and locks in a price.
“Being able to lock in those prices for the next twelve months can be a big savings with climbing inflation we’ve seen the past two years,” says Thomas Eatherly, Pinion farm and ranch business advisor.“ You’re essentially turning a variable cost into a fixed cost when you prepay for it.” With inflation, it may be the difference between $85 / acre for corn seed now and $100 / acre in a few months. That’s a significant saving.
- Talk with your business advisor. Set up a time to meet with your tax or financial advisor. These professionals are a part of your operation to advise and provide feedback – use them! Ask about tax opportunities, estate planning, charitable gifting, depreciation needs, bringing in the next generations, prepay opportunities, and any other areas of concern.
- Call your landlord and vendors. It’s important to keep a strong relationship with both your landlord and your vendors. Call your landlord and educate them on what you’re doing on the operation and understand their wants and needs. Reach out to your vendor and do the same. See what their goals are as the year ends. They may give you a deal on fertilizer, tires, or other products they want to get rid of before the new year.
- Check on your farm operating agreement. Are equipment rents, leases and other semi-annual notes paid? Are you and other partners fulfilling all the responsibilities and duties within the agreement? Revisit anything that may have fallen through the cracks during the busy harvest season and finish the year strong.