As a farm manager for some 30 years, Jerry Moss, Baylis, Ill., has been there, done that. Here he offers up a cheat sheet of ideas for boosting return on investment, and saving money without compromising income. Own your own storage to expedite harvest. Lines at elevators can get long, and their night or weekend hours can be limited. Few farmers sell crops at harvest, with most owning bins or paying for storage. “The ROI or IRR [internal rate of return] for the grain bin investment is one of the highest in row crop agriculture,” says Moss. “It is estimated that over 60% of corn farmers could increase their net income with additional on-farm storage, not as a marketing tool but to capture a better basis and time value. With today’s higher yields, we generally recommend capacity to store 200 bushels per acre.”

[caption id="" align="aligncenter" width="458"] Say no to high cash rent, says farm manager Jerry Moss. "There is no correlation between high-end renters and superior marketing skills."[/caption]

Add tech without breaking the bank. Since new tech can be added to most equipment up to 20 years old, newer machinery is not necessary to achieve maximum economic yields, especially when top-end used equipment is discounted 30% to 40%. A client recently bought two current John Deere 680 combines for $175,000 each at auction, says Moss. They sold for $450,000 new and had about 70% of their viable economic life remaining. Take advantage of federally subsidized risk protection. Highly subsidized crop insurance is one of the best financial advantages in farming. Take full advantage of this government reimbursement. “If we assume that the insurance premium is realistically representative of the crop risk failure for our state or area, then it becomes painfully obvious to buy the best coverage available, meaning the lowest deductible for the product we choose,” says Moss. “For example, if Uncle Sam is going to pay 50% of your auto policy, you would probably zero the deductible and add the new car replacement provision. Surprisingly, too many farmers and university budgets try to cut costs in this area and dramatically increase financial risk.” Hire the expertise you need. After-tax dollars increase wealth, yet a number of top-notch farmers will not hire the experts to cut the tax burden and critique their cash flow. This is seen by the financially stressed segment of operators who bought too much equipment on credit to avoid taxes, and now can’t cash-flow the payments, says Moss. Consultants and continuing education can give you some good ideas and more than pay for fees and your time at a meeting, seminar or school. “We highly recommend the use of independent agronomic, marketing and financial consultants,” he says. “This business is simply too complex and too many dollars at risk to not take out some brainpower insurance.” Say no to high cash rent. Even farmers who are low-cost producers in all areas, from agronomic inputs to machinery, can get caught up in wanting to be the big player in the region. As a result, they often pay $50 to $100 more per acre in cash rent than neighbors. “Too many farmers and landlords assume the high-end renters have found a secret way to cash-flow the impossible, because they would not bid that high to lose money,” says Moss. “In fact, there is no correlation between high-end renters and superior marketing skills.” Use the whole marketing calendar. It makes no sense to only sell the last three months of the marketing year before the new crop harvest. Instead, use a two-year marketing window for each crop and learn to pull the trigger when prices rise above breakeven costs. Source - http://farmfutures.com