Reducing Financial Stress
It’s a new year with new opportunities. Now is a good time to do some number-crunching and rebalance your balance sheets before any financial stress becomes too overwhelming.
Jase Wagner is the chief financial officer at Compeer Financial. He says the first thing is to organize your data in a way so you can understand your cost of production.
"If you can understand how much it costs to plant that acre, or work with that livestock production unit, that’s really important, so get your data in order, that’s a big thing. Look at your interest rate profile. How much do you have in short-term versus long-term? You may be able to work with your lender to extend your debt maturity and improve your cash flow. And finally, just look at your risk management plan," says Wagner. "Part of that data is understanding where you have opportunities to lock in some price, take some risk off the table."
Communicate with your ag lender early, and often. Wagner says one of the biggest risks is producers not changing with the new economics.
"It’s a personal risk, it’s inside of what we do. Can you remove yourself from that emotional decision of controlling that land and make that decision to walk away, which is maybe better for you in a long-term perspective to survive through this lower price and work into the future," he says. "But a lot of it is personal, trying to make those choices, give up some things you’ve had in the past, or tighten down those decision-making processes to insure that you can stay long-term."