Starting the New Year Right
Here are 5 things farmers and ranchers can do now to get ready
Early winter is a good time for agricultural producers to take stock of the past year and plan for the next. Before calving and planting seasons start, use this downtime to tackle tasks that often slip through the cracks.
Here are some ideas to get you started.
1. Organize your office
Tax season is almost here. Get your 2021 records in order before you start spending for 2022. File or scan receipts and documents. Update spreadsheets. Figure out your return on investment. With better records, you can make better cost comparisons for equipment and inputs.
“One of the best things ag producers can do right now is budget for 2022 and evaluate your historical trends,” says Joseph Grier, Legacy Ag Credit branch manager in Canton, Texas. “Pin down your costs as accurately as you can, and project your prices based on what’s currently available in your market. That way you can see if there are any shortfalls.”
2. Learn from mistakes
Before you set your 2022 business plan, analyze past mistakes and successes. If you need another perspective, visit with your loan officer. Farm Credit co-ops act in your best interests, and their experts will gladly offer feedback.
“I encourage producers to do a balance sheet every January and June,” Grier says. “Evaluate your assets compared to this time last year to see if you’ve gained ground.
“Getting ahead often comes down to assessing what went wrong and what you can improve.”
3. Update your insurance and will
Do you have adequate life and accident insurance? Have you set up a power of attorney and medical power of attorney? Even if you’re young and don’t have much equity, secure your family’s future in case something happens to you.
“Make sure you have enough life insurance for your debt load,” says Jim Tollison, Alabama Farm Credit regional vice president. “The time to buy is while you’re young, when premiums are low and it’s easier to qualify.
“Have your agent evaluate the insurance on your equipment and structures, too, given the rising costs to replace and rebuild.”
4. Make a succession plan
Deciding how to pass the farm to the next generation is an emotional decision.
Need help? Find an estate-planning attorney who’s worked with farmers and ranchers. Look for resources from the USDA, ag organizations and your state Cooperative Extension service. Or search for “Farm Credit estate planning” online to find helpful articles.
“Some people put it off because they don’t want to think about dying,” Tollison says. “Step one is to have the conversation. Once you know your goals, you can explore how to achieve them.
“And at some point you have to take a leap of faith and trust the next generation.”
5. Schedule time to unwind
It’s hard to relax when you have a business to run. But if you wait until the work is done, you might never take a break.
Put a family vacation on the calendar. Commit to fishing or hunting for a weekend. Or plan some overnight trips to scout equipment, attend cattle sales or enjoy a major livestock show and rodeo.
Busy season will soon be here, so catch up while you can. When you start the new year with a clean slate, you can focus on the future rather than the past.
Jim Tollison, Alabama Farm Credit & Joseph Grier, Legacy Ag Credit
Farm Credit Bank of Texas: https://pulse.ly/6e3b8wm6av