By Richard Halopka, UW-Extension Agriculture Agent for Clark County
When working in private industry one day my boss told me “we need to put some money in the till.” My first thought was what is he talking about? The simple answer is every day when you begin the day you turn on the lights and make coffee. Well, we need to pay those bills. How did we pay bills? We sold products and in business you have an inventory of products. Some turn over fast and some not so fast. So, when he said “put money in the till” some of the not so fast inventory was on the shelf to long. You all have heard of sale prices or even fire sale prices, that is putting money in the till.
Many farmers I’m sure may have the same problem. Some days we just need “money in the till.” In tight margin times we may have to review our inventory and make decisions on our inventory.
Many will say “I don’t have inventory,” but you do and you may need to turn some inventory into cash. Look around your farm; you have an inventory of livestock, grain, forage, land, buildings, and equipment. I understand it is difficult maybe to view it as that, but farming is not much different than any business on Main Street or in the mall.
You grow crops to sell or feed to livestock; you trade some inventory of feed to produce milk or meat. You have an inventory of land to grow those crops and an inventory of equipment to plant and harvest crops. You have an inventory of buildings to house livestock and store crops. As a farmer you have a large inventory.
So in tight times how do I put money in the till?
Good question. It is hard to answer, but this is where management comes into play.
First take inventory of all aspects of your farming operation. Second, what inventory could I reduce? An example, if you have crops stored beyond 1 or 2 years you may need to consider selling crops or adding livestock to feed the crop out and turn it into cash.
Third, land inventory, are you renting or buying land because it is handy? Sometimes paying rent or owning excess land may not be best for the bottom line and forgoing the rent or monthly payment may return more cash to the farm.
Fourth, equipment inventory, are you buying something you want or need or do you have stuff parked you haven’t used for greater than three years? Everybody likes owning stuff it makes us feel good, but at some point we may need to turn stuff into cash and put money in the till. There are wants and needs in life cover the needs and ignore the wants until times improve. Operations must be completed each day on the farm, equipment is needed, but there may be alternatives to complete some tasks and some of the older unused equipment may need to leave the farm to put money in the till. A person once told me if it has wheels you can always get rid of it.
Putting money in the till is a tough call, but as a farm manager you need to make tough decisions and get through these tight margin times.
If you need help please contact our office at 715-743-5121 or email me at email@example.com there is help for farmers who need assistance and there is no charge for the advice.
Note: This article originally was published in the Marquette County Tribune, Waushara Argus, and/or the Berlin Journal.