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General Farm Management & Strategy
Off-the-shelf strategic risk management tools remain unavailable for farmers (unlike availability of forward pricing commodities, hedging commodities using futures and/or options, locking in input prices, etc., for financial, marketing, and production risk), furthering the misconception that strategic risks are “unmanageable”. Strategic risk management requires a more deliberate approach (i.e., enhancing farm agility and absorption capacity). Results presented in this article reveal how resilience to strategic risk relates to future growth expectations, optimism on the state of the agricultural economy, use of management practices, and financial performance.
Read MorePurdue ag economists James Mintert and Michael Langemeier share some insight into the results of the May 2023 Purdue University-CME Group Ag Economy Barometer survey. Producer sentiment fell to its weakest reading since July 2022, as the Purdue University-CME Group Ag Economy Barometer Index declined 19 points to a reading of 104 in May. This month’s survey was conducted from May 15-19, 2023.
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 MoreDuring the May 3rd Federal Open Market Committee (FOMC) meeting, the FOMC voting members raised the Federal Funds Rate by another 25 basis points; making the target Federal Funds Rate between 5% and 5.25%. This Federal Reserve has consistently increased the Federal Funds Rate during each FOMC meeting for over a year.
Read MoreStrategic risk is difficult to quantify. Despite this fact, it is important to prepare risks impacting U.S. farms and build resilience.
Read MoreThere are numerous reasons why a farm may want to expand including the following: reduce costs, improve profit margins, improve asset utilization, bring in new family members, invest retained earnings, and more fully utilize the skills of key managers (Boehlje and Langemeier, 2018). The first three reasons are related to economies of size. In general,…
Read MorePurdue ag economists James Mintert and Michael Langemeier share some insight into the results of the April 2023 Purdue University-CME Group Ag Economy Barometer survey. Farmer sentiment improved modestly in April as the Ag Economy Barometer reversed a two-month decline up 6 points to a reading of 123. This month’s survey was conducted from April 10-14, 2023.
Read MoreOver the past several years, maintaining agility and absorption capacity has been a solid mechanism to deal with strategic risk. Absorption capacity has enabled farms to maintain some sense of stability with market turbulence caused by increases in input prices, Covid-19, trade restrictions, higher rental rates, fluctuations in labor availability, ongoing geopolitical conflict, and market downturns. As farms face these obstacles there is also a greater need for agility, including innovative techniques that can reduce business costs, enable workers to shift assignments to meet changing business needs, and diversify to reduce risk.
Read MoreIn its most recent World Agricultural Supply & Demand Estimates (WASDE) report published on April 11th, USDA estimated that 2022 crop corn exports would total 1.85 billion bushels, equal to about 13% of U.S. production. If realized the 1.85 billion bushel forecast would result in the second lowest export total of the last decade and would be down sharply.
Read MoreIs your farming operation considering farm growth in the near future? Michael Langemeier discusses farm growth with Farm Marketer’s Tracy Brunet on the Impact Farming podcast.
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