Profitable farming is an ongoing challenge. But for many agricultural entrepreneurs and farmers, recent months have brought additional unprecedented health, social and economic challenges. Against this backdrop, now is the perfect time to tackle these issues by shoring up your operations, taking a close look at your expenses, and strategically planning for future growth. Here are five profitable strategies that small farm owners can focus on in the next several months.
1. Use Tech to Streamline Farm Management
Closely managing costs, timing operations to the day, and identifying new opportunities are all important aspects of profitable farming. Yet when you rise before the sun’s up and work all day long, it can be challenging to balance forward-focused thinking with demanding day-to-day operations. Increasingly, profitable small farms are relying on farm management technology. Not only can these tools help you develop farm-specific financials, they’re also helpful for creating crop plans, managing livestock, and maintaining equipment and supply inventory, among other tasks. Popular options on the market include Agworld, Granular and Farmlogics ERP.
2. Increase Production to Boost Profits
Another lever you can pull to build a profitable farm is to increase production to help grow revenue. Whether you’re expanding your current operations by planting more crops or engaging with more livestock, it’s worth assessing how these actions can foster growth. Now may also be the perfect time to pivot into new activities, whether you’re adding a pick-your-own experience to a crop-based farm or introducing livestock like alpaca that can be leveraged for wool. Different parts of the market are impacted by forces in unique ways, and even when profits are down in one area, a diversified portfolio can keep your farm profitable overall.
3. Invest in Farm Land
Agriculture is a land-intensive business — and buying at the right time can make all the difference in developing a long-term profitable farm. In some markets, land prices are dropping, loan rates are at an all-time low and many businesses are pausing larger purchases. If you’re focusing on growth, acquiring land with solid market prices and favorable loan terms could help set you up for profitable farming. Introduce new crops or livestock, expand your current operations, and pivot to bring new experiences to what you’re offering by putting more land to work for your business.
4. Upgrade Your Farm Equipment
Farming equipment works hard every day, and over time the wear and tear can slow down production, add up in repair expenses and create frustration. The key to profitable farming is to have well-running equipment when you need it. With interest rates low and the ability to take advantage of the IRS Section 179 tax deduction, now might be the right time to buy a tractor, upgrade your vehicle fleet or make improvements to your facilities. If you don’t have the savings or cash flow to take advantage of the opportunity, an equipment leasing or purchase loan can help make your vision a reality.
5. Expand Your Team
Adding new staff can help grow profitable small farms. For example, when one farmer wanted to expand into “pick-your-own” offerings, they hired a farm helper who had extensive experience in similar businesses. With that worker’s expertise, the farmer was able to quickly develop and scale an experience that their customers loved. Expanding your team can help ensure that you’re maximizing productivity and introducing fresh skills and ideas that can fuel your long-term growth.
Running a profitable small farm takes significant focus, effort, and planning. And now can be the perfect time to take on an agriculture farm loan, or upgrade your equipment and land, turbocharge productivity and look at how to keep your farm earnings growing with smart technology and new offerings.