Projected profit margins for crop production in 2020 are likely to be at or below breakeven levels for many producers. Costs for some crop inputs, such as fertilizer and fuel, have increased slightly in the past couple of years, while crop revenues for many producers have declined or stayed steady. It appears that low commodity prices and lower gross revenue levels in corn and soybean production will likely continue for the 2020 crop year. The profit margins in the livestock sector improved somewhat in late in 2019, but were quite variable, which is a trend that is also likely to continue in 2020. Credit availability for agriculture should remain good for farm businesses that are on a solid financial base; however, credit could get much tighter for farm businesses that are in a higher-risk financial position.
The following are some financial strategies for farm businesses to consider during these highly volatile and potential stressful financial times in the farming business.
1. Keep the ‘current position’ (cash available) segment of the farm business strong.
• Pay attention to the level of working capital and the “current ratio” on your…
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