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(Continued from Page 1) be possible. One such area is financial management.
In today’s economy, capital requirements for a farming operation are high. To buy a 500-acre farm can cost from $250,000 to more than $1 million. Annual expenses can run as high as $150,000 or more. Profit margins are slim, with only about 5 percent to 10 percent of gross income remaining as net after expenses are deducted.
Capital investment is so high and margins are so slim that farm owners cannot afford to be without financial planning advice which can prevent their making costly, avoidable errors.
Today, the farm manager’s role is increasingly to counsel the farm owner to seek sound financial planning assistance.
The farm manager should be familiar enough with the basics of financial planning to advise the farm owner should, for example, a problem arise involving an attorney, an accountant and a lender who each offer different — and perhaps conflicting — advice.
Budgeting is crucial to a successful farm operation. It is foolish to operate a farm without a plan including detailed cash flow budgets and close monitoring of actual performance compared to the budget during the year.
This, plus a wider variety of financing alternatives, more complex tax laws, a greater number of alternative investments in the marketplace, shows clearly the importance of the farm manager’s financial management skills.
Today’s farm manager must also be skilled in agricultural marketing. Prior to the grain deal with the Soviets in the fall of 1972, price fluctuations of five or ten cents per bushel were considered a major price change.
Today, however, prices fluctuate almost daily, and there is quite a bit of hedging activity in the futures markets. The more knowledgeable a farm manager is, the better his operation’s chances of profiting from transactions in the world marketplace.
Soil conservation may be one of the biggest challenges facing agriculture in the coming decade. Professional farm managers, long considered soil conservationists, have the opportunity to take on a leadership role in promoting the adoption of new conservation practices.
The coming decade is expected to see more emphasis on no-till and minimum-till farming, as well as greater concern with the effects of chemicals on
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