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financial stress
Contingency plans related to how to respond to changes in projected cash flows are important. Given the expected drop in crop prices this fall and wide variability in expected prices, it would be prudent for a farm to examine the sensitivity of their cash flow and repayment capacity to changes in crop prices. Using a case farm in southwest Indiana, Michael illustrates how contingency plans could be used.
Read MoreMidwest crop producers have experienced a significant downturn in corn, soybean, and wheat prices since the beginning of the year and farm incomes are expected to be much lower in 2024 than they have been the last three to four years. Moreover, current expectations are that prices will continue to remain at or below the cost of production for at least a couple more years. Consequently, a key question being asked is as follows: “who is the most vulnerable financially during this downturn”?
Read MoreContingency plans related to how to respond to changes in projected cash flows are also important. Given the expected drop in crop prices this fall, it would be prudent for a farm to examine the sensitivity of their cash flow and repayment capacity to changes in crop prices.
Read MoreFarming is never the same from year to year – sometimes prices are good, net farm income is high, and other times margins are tight. Planning ahead, or contingency planning for financial hardship is important for any farm operation. How to evaluate farm financials, update financial statements, analyze performance, and when borrowing makes sense.
Read MoreFarms with low profitability and high solvency are typically financially stressed. This article uses the operating profit margin ratio and the debt to asset ratio to create a measure of financial stress.
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