WEBINAR: Habits of Financially Resilient Farms

Gary Schnitkey, Ph.D., explains the seven habits of financially resilient farmers. He will also discuss the importance of monitoring cash flow and assessing risk management.

Key takeaways:

  • Topics
    • Evaluate farms by high and low profitability
    • Survey high-profit farms
    • Seven habits of financially resilient farmers
  • Seven Habits
    • Innovative but not on the bleeding edge of technology
    • Always evaluating new technologies
    • Return on investment is an important evaluation criteria
    • Cost control is paramount
    • Production is maintained at high levels
      • The right expertise is brought to the farms
    • Non-timing price opportunities are sought
  • Performance Groups
    • Central and Northern IL Counties
      • Champaign, Ford, McLean, Piatt
      • Dekalb, LaSalle, Lee, Ogle
      • Southern Illinois
    • Two time periods
      • High/rising returns: 2010 to 2012
      • Low/declining returns: 2014 to 2016
    • Define performance groups over 3-year horizon
      • Top 1/3 of returns
      • Mid 1/3 of returns
      • Low 1/3 of returns
  • Main cost factors
    • Direct
      • Seed, fertilizer, pesticide, drying and storage
    • Power
      • Machinery depreciation, hire, repair, fuel and oil utilities, light vehicle
    • Overhead
      • Hired labor, building, insurance, misc., non-land interest
  • Other characteristics
    • Farm size
      • High return group operate more acres
      • 100 to 200-acre difference across groups
    • Soil productivity not different across groups
    • Close to 50/50 corn/soy rotation
  • Take aways
    • Some farms outperform their peers consistently over time
    • These farms tend to have higher revenues and lower costs
      • Revenues accounted for larger share of difference during high return period
      • Costs accounts for larger share of difference during lower return period
    • Focused on operator and farmland returns
    • Do land costs tend to wash out these differences?
      • No – farms identified in higher return groups tended to have lower land costs, pay average or lower cash rents as well
  • Follow-up survey with producers
    • Face to face survey containing 56 questions with producers in central and east central Illinois (9 farms)
    • Most questions relate to the 2016 growing season
    • Survey includes questions to get at type of production and managerial practices
    • Goal of identifying common practices among the more profitable producers
      • General areas addressed
        • Size (acres) and labor force
        • Tillage practices
        • Planting practices
        • Growing season practices
        • Harvesting practices
        • Managerial practices
        • Attitudinal
  • Takeaways from follow-up survey
    • Generally typical production practices regarding tillage and rotation
    • Create additional value
    • Movement toward earlier planting of soybeans
    • Seeing rates reduced, all using some type of seed treatments
    • Seed selection mainly based on yield potential, herbicide use and disease resistance as compared to cost of seed
    • Used typical marketing and risk management strategies
    • Used newer technologies and production practices (seed treatments, draper heads, narrower rows, fungicides) but not on bleeding edge
    • Attention to detail and cost control very important to financial success

Illinois Soybean Association
The Illinois Soybean Association (ISA) is a statewide organization that strives to enable Illinois soybean producers to be the most knowledgeable and profitable soybean producers around the world. ISA represents more than 43,000 soybean farmers in Illinois through two primary roles; the state soybean checkoff and legislative and regulatory advocacy efforts.



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