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December 8, 2015

Farmers are back to pinching pennies

By John Woodmansee

    I grew up on a farm in Grant County back in the 1970's. Amid a number of events and circumstances in that time period, and into the early 80's, it was rough on farmers and families. Years and circumstances have changed, but one circumstance is eerily familiar again: financial conditions are rough on farmers and families. We're back to pinching pennies, because margins are pinched - especially in the crops sector.

    I've read multiple articles recently in the farm press about this issue, and more will be published. I've always been an advocate of arming yourself with the best and most current information available so that more informed decisions may be made. University specialists, industry specialists, financial consultants, tax professionals, risk managers and even professional counselors may provide useful and vital information for individuals and families through this time. Don't try to go it alone.

    One thing I'd like to personally offer for your thought of the day is that there is hope. I cannot promise when you might reach the proverbial "light at the end of the tunnel," but I do know that at least two facts remain: people will continue to need food to eat, and things will change.

    In the meantime, it's important to navigate current conditions. Good advice from reliable sources will be important to listen to and to heed. Items like farm and family budgets, farm income statements, cash flow projections and balance sheets are now items of relevance that may have been overlooked in recent years. Farmers will need to be efficient consumers of farm inputs, wise in cash rent decisions, good agronomists and good risk managers. Families will probably have to do some penny-pinching as well.

    On the issue of risk management, Purdue has launched a new website farmers can use to understand and manage farm risk. Farm Risk Resources (www.farmriskresources.com) is now available from Purdue University's Center for Commercial Agriculture and the Indiana Soybean Alliance. The goal is to offer basic risk management concepts and principles critical to thinking through the decisions farmers make on a daily basis.

    In addition to the website, the Indiana Soybean Alliance and Indiana Corn Growers Association will offer a series of three free workshops titled, "Managing Risk in a Challenging Farm Economy." One of the three has already occurred - Dec. 7 in West Lafayette. Presenters include Jim Mintert, director of Purdue's Center for Commercial Agriculture, and Purdue Extension agricultural economists Michael Langemeier and Michael Boehlje.

    Upcoming dates and locations include:

* Jan. 11: Indiana Grand, Shelbyville.

* Jan. 14: Fort Wayne Farm Show, Fort Wayne.

    In addition to these dates, Extension Educators in northeast Indiana (myself included) are working to get an additional workshop scheduled sometime after the Fort Wayne Farm Show. Stay tuned.

    Finally, local farmers may wish to tentatively mark their calendars for a private applicator recertification program I plan to offer Feb. 24 in Whitley County (morning) and Noble County (afternoon) that will include a talk by Purdue's Robert L. "Bob" Nielsen, corn specialist, entitled, "Agronomic Decisions to Improve Contribution Margins."

    Long term outlooks by Purdue economists suggest that conditions may moderate or improve in a few years, but the reality now is that there are a few rough years to endure. Financial efficiency, risk management, and good production practices will all be vital moving forward.