Commodity prices are good, we all see that. While you are hopefully taking advantage of these good prices, we are all aware that inputs are also going up. This means that your margins are still being squeezed, albeit not as hard as they were in the years past. Despite the good prices, it is a good idea to put your operation through a stress test and see how you need to plan in case things change further.
Jeff Hardin is the VP Relationship Manager with Conterra Ag Capital, based in West Des Moines. He says stress testing your farming operation is not unlike the testing your doctor will do for your heart. It is showing you where you may have weaknesses, and what impacts that changes in prices or costs may have on your bottom line.
It may not just be the costs of inputs that can put a strain on your finances. There have been mentions of inflation, and that can change your loan rates. This is another area that your operating lender can look at, and determine what effects that could have.
Not only are we seeing other input costs going up, but diesel prices and petroleum, in general, are seeing prices go up.
Hardin suggests sitting down with your lender and running the numbers as soon as possible. This way you can be prepared for anything that may be unexpected.
To learn more about the services that Conterra Ag Capital can provide, visit their website.
