Earlier this month, Evan Hahn, Vice President Credit-Agribusiness with Farm Credit Mid-America shared some thoughts on how to better manage fixed costs. Employee and family labor expenses can be difficult to trim but the costs of overpaying for labor or not fully utilizing a workforce can be a drag on earnings.
“Identifying ways to improve production efficiency is one strategy for adjusting labor costs,” Hahn said. “For example, precision equipment has allowed farmers to reduce their labor needs while still operating efficiently.”
Family expenses is another tough area to find ways to cut down, but Hahn says it needs to be considered.
“As farm profits decline with commodity prices, families may need to take a closer look at their living expenses and adapt to living with less income,” Hahn said. “One way to control family living costs is to write yourself a check from the operation every month. Separating your family living funds from operational expenses will keep you from overspending.”
As you examine these expenses, Hahn suggests farmers talk to their financial advisor or lender to better understand how these costs impact their balance.
AUDIO: The Ohio Ag Net’s Ty Higgins visits with Farm Credit’s Evan Hahn about addition ways to manage fixed costs on the farm.
For more financial tips, insights and perspectives from Farm Credit Mid-America visit e-farmcredit.com/insights