In a time like this, there’s so much financial turmoil out there, and many people concerned about what their farm business looks like as we try to get to the other side of COVID-19. We’ve got major demand deterioration in the protein markets, there’s milk dumping going on in parts of the U.S. and Canada — it’s not just mental stress that we need to make sure we under control, but we’ve also got some financial stress; and a lot of times those two things are very interrelated.
Working capital is really your insulation from some of that, and we never really seem to have enough of it — especially when you’re going through something like the current crisis. How would you ever plan for this? When you’re coming up with your risk sheet, the risk to your farm, did you have ‘pandemic’ written down? I don’t think so. Managing your working capital, cash flow, and risk management tools are examples of management instruments that you must manage during the 2020 growing season.
We’re focused on a lot on the “in the moment” issues on a daily basis, with all the stones that are being thrown our way from a farm business standpoint, but we need to focus a bit on some of the tactics and skills of farm management to help everyone get to the other side of this. I’m concerned for a lot of our audience — I think there’s a lot of stress out there, the stress is real, and I’m worried about a lot of you. I think though, that this spring is a moment in time where we have to be thinking about the management of our farm businesses adjacent to all of the field work that must get done.
Some of you are calving and a lot of you are in your dairy barns as you are on a daily basis, but a lot of you are going to hit the fields this spring and it’s a natural tendency to shut off the CFO side of our brains. This is a moment in time when we cannot fall into this trap. We have to be the ultimate managers at this moment to ensure we do not miss a one-day rally in the market, an opportunity to hedge, an application deadline for funding, or a chance to better manage your cash flow. We need to be focused not only on growing that crop, but we need to be masters of risk management, of marketing, and of insuring that we aren’t missing something financially that puts us behind a serious 8-ball.
Many of you are probably saying “I already feel like I’m behind the 8-ball,” and I’m not going to argue with you — there’s a lot of stress out there especially in the livestock sector. Some of you are a one-person band or you don’t have help, but if there is one thing other than your health to prioritize this spring, is to figure out how you’re going to be the ultimate manager. There’s no time to waste.