Most farmers deal with challenging economic conditions. You’re likely “asset rich, cash poor,” or not even “asset rich” if you’re just starting out without land of your own. You’re also sitting in a position in the agricultural supply chain where you “buy retail and sell wholesale.”
In most recent years, farm production expenses are projected to increase while farm income will decrease. This dynamic will put some farmers in a tight spot trying to make ends meet while also servicing their existing debt.
With these trends, it’s no wonder that many growers face difficulty accessing funding. Extreme and variable weather conditions, market price volatility, agricultural policy decisions and increased consolidation are the four horsemen hovering at the edge of the average farmer’s fields today.
Rural communities in particular face limited access to broadband, which can limit rural farmers from quickly accessing modern financial support. And while county-level USDA offices are often helpful, not every county is well staffed and many aspiring and established farmers have told us their emails and calls go unanswered.
Ultimately, it will take policy and cultural change to support American farmers, but in the meantime, here are some tips to make your farm more likely to succeed.
Would you rather throw all of your farm receipts and invoices in a shoebox or a messy folder on your computer, or snap a quick photo, upload it to an organized app, and categorize it, then forget about it? Unfortunately many farmers are stuck doing the former (receipt shoebox) when they’d free up their time by doing the latter.
We’re under no false illusions here: the truth is that most farmers get into farming for the farming not the financial aspects. That’s why you can smartly navigate farm financial tracking with helpful and secure digital tools, like FarmRaise Tracks.
By proactively uploading and categorizing your transactions, you’ll be able to spot trends in spending that can help you make smarter decisions in the future. One FarmRaise Tracks user said:
“It was a writing on the wall sort of moment. I was using your app to track costs of our new sheep herd and looking back at my expenses, and it hit me: That's why farmers cull sheep in November. Our costs had ramped up so much after lambing. Your app showed me this and now I know."
Are you ready to start proactively organizing your finances? See how Tracks works, and if you love it, you can test out FarmRaise Tracks by creating a Premium FarmRaise account.
When examining the most common reasons why farms fail, the answer isn’t necessarily high interest rates or decisions from Washington, D.C. One of the most common reasons farms fail in America is a lack of budgeting and financial savvy.
The Farm Bill, federal government decisions and poor infrastructure in rural areas certainly have powerful effects on the agricultural sector. However, it’s the average farm family’s budgeting struggle that goes unnoticed as a direct reason for farm failure.
When it comes to the well-being of your farm, budgets can keep your spending tight and help you accurately file taxes.
If you make a budget today, you’ll start being able to predict variables in the future like:
Ready to build a budget? Learn more about budgeting best practices and download a template on our budgeting blog!
Once you have good insight into your farm finances through proper tracking and budgeting, you’ll be in a great position to apply for farm grants. Grants can defray your expenses or help you invest in new practices, better marketing and innovative technology.
Applying for grants can be intimidating, so that’s why we created a farm grants database that helps you take action:
All Premium members get access to the full farm grants library - including public and private options - and we send you ongoing alerts to your phone or email about upcoming deadlines and newly added programs.
We also help you fill out the paperwork to apply for the largest federal cost-share program that helps you invest in soil health, water quality and on-farm conservation.
Farmers and ranchers are more than just producers. You’re scientists, engineers and researchers in many ways - observing what’s happening on your land and trying new methods to ensure growth.
You need to be able to adopt new technologies to level up your operation. It’s good to stay on top of trends by reading the news or signing up for farming technology newsletters. (You can join our newsletter for free and get ag tech, news and tips sent to your inbox weekly.) Some technology manufacturers will even allow farmers to demo or pilot their systems for free in order to gain important insight into how the technology works for you.
But, if the new technology isn’t free, then you can find ways to fund your research with grants like the USDA-SARE program or innovative financing from lenders like Steward and Mad Capital or crowdsourced funders like Kiva.
Many landowners are aware that they can donate property, but fewer are aware that there are many other ways to enter into legal agreements and receive benefits for preserving their land. It’s worth exploring how conservation easements can secure your agricultural land's future and even offer tax incentives for land preservation.
Easements can help ensure land is used for agricultural purposes or to prevent certain development or construction on your property, even generations into the future.
Landowners can enter agreements with conservancies, foundations, or other organizations to establish an easement for the land. Most conservation agreements include a pledge not to develop land in a certain way or to preserve it for agricultural uses only. Many easements can last beyond the lifetime of a single ownership, making it one of the most surefire ways to conserve land long-term.
You can often get support from the USDA to establish an easement. If you’re curious about this opportunity, you can learn more through our easements blog post!
Farm succession planning is the process of passing on the ownership of your farm to another person. This could be a family member, friend or even a burgeoning farmer who’s struggling to get started without land of their own.
Your succession plan can outline your land, equipment, who has equity and your retirement plan. It can be a reflective time when you think about your personal legacy, selling your farm or handing over control to family members. An effective succession plan can set you on a solid retirement path and set the next generation up for success.
If you don’t have family to include in your succession plan, consider passing your land onto a beginning farmer. Some states, like Iowa, even offer tax incentives to lease or sell your land to a beginning farmer.
Want to get started? Check out this comprehensive list of state extension services and guides related to farm succession planning.
One way to increase the resilience of your farm’s income is to diversify what you produce. While one to two crop systems are appealing from an efficiency standpoint, these systems are subject to the whims of the weather and the market.
Consider ways you can add diversity into your production. This could be by growing three or four crops - some annual, and some perennial - and including livestock in the mix. This could also be by exploring new applications for the crops you grow through value-added production. For example, if you grow and sell soybeans, consider making and selling a signature soy sauce. Dairy farmers may consider selling their manure as fertilizer.
You can also think of how to leverage your land more effectively as an asset. Are you able to host guests for camping through platforms like HipCamp to earn extra income? Are you able to support a “pick your own” experience for local consumers? These types of endeavors benefit your income streams, while also increasing farm awareness in the broader community. Win, win!
At some point in your farming journey, you’ll likely consider boosting your farm’s profitability or protection with help from the U.S. Department of Agriculture (USDA) farm funding programs, such as grants, Farm Service Agency (FSA) loans, disaster assistance or crop insurance. Government payments were responsible for 10% of net farm income across the US in 2022.
It’s best to get ahead of things by making contact with the USDA as you start farming. Most counties across the country have a USDA Service Center, where you’ll often be able to meet representatives from these agencies:
Here’s how to make contact:
We mentioned before the importance of diversifying your farm production for greater resilience. Another tool for farm resilience is on-farm conservation or you might also think of this as regenerative agriculture. This is something almost every farmer sees value in doing, but very few are able to proactively invest in stewardship due to cash constraints.
What do we mean by on-farm conservation? You might be thinking “organic farmers” or “combatting climate change” but we’re really referring to a suite of practices that protect and build soil, improve water quality, and support ecological biodiversity. These practices include things like cover cropping, rotational grazing, reduced tillage, wildlife and pollinator habitat plantings, energy efficiency projects, renewable energy installation, nutrient management planning, precision agriculture and so much more.
The great thing about conservation is that this is one of the best uses of grant funding, and there are billions of dollars in grant funding out there.
To get started with conservation, the first step is to do a bit of planning. Map out your farm fields and list out the resource concerns you’re facing in each one. Resource concerns are things like soil erosion, water pollution by nutrients, or lack of animal shelter. Next, map out your goals for each field. What do you want to achieve from a stewardship standpoint across the farm?
With this conservation plan in hand, you can use tools like the FarmRaise funding dashboard to find grants that will help you invest in conservation. We can also help you fill out the paperwork for the nation’s largest conservation cost-share program.
Farm taxes are usually covered by the IRS form Schedule F. This form isn’t too complicated, but it can be tricky to navigate special considerations like how to account for conservation expenses to maximize your refund.
We recommend starting your tax prep by keeping your expenses organized in an ongoing and proactive way. FarmRaise Tracks is designed to do just that for you - allowing you to upload receipts, create transactions and export year-end reports to your tax provider. Whatever tool you use, stick with it and use it regularly so that you don’t have to do a bunch of scrambling during tax season.
You’ll also want to find a tax preparer you trust. Find someone who’s familiar with the nuances of farm expenses and can help you think about how to maximize your refund.
What do you think? What else matters as you build your successful farm? Let us know!
Farming communities from Nebraska to New York support the nation as key players in our food systems. It’s going to take the nation to support farmers by investing in structural, technological and cultural changes. In the meantime, try these tips and remember that FarmRaise is here to support farmers and ranchers on their journey toward farm profitability.
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