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What are the common mistakes farmers do?

24-Dec-2020 |  Asked by: Pavan

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Running a farm can be a costly task, especially when there are uncontrollable factors that affect the profitability of a farm ,weather disturbances and commodity prices, for example. There are many of elements in a farmer’s control that can decrease farm production costs. Many farmers are unaware of the opportunities they’re missing, not knowing that some minor adjustments could have a huge impact in reducing farming costs. Here are some of the most common mistakes that farmers make and the small fixes that can lead to big cost-savings when it comes to farm expenses.
Mistake 1: Too Much Diversification of Seed Purchases
Many farmers buy relatively small quantities of seeds from several different suppliers.
Purchase seed from the two or three highest performing brands or companies that produce what you’re in the market for, then make your final purchases based on who gives your operation the highest return on investment. When that time comes, don’t be afraid to negotiate.
Mistake 2: Spending Too Much on Chemicals Such as Pesticides and Herbicides
Protection against pests and weeds is important but some farmers over-spend on chemical solutions.Analyze and research generic chemical alternatives, evaluate guarantees or warranties when purchasing chemicals, and keep in mind that the more expensive modes of action for combatting resistant weeds aren’t always the best.
Mistake 3: Buying Unnecessary Machinery and Equipment
According to Farm Progress, mistakes when making machinery and equipment purchases could cost farmers thousands of dollars annually.
To make informed decisions, start by identifying reasons for replacing equipment, considering factors such as reliability, capacity, long-run costs, obsolescence, and tax consequences.
Mistake 4: Spending Too Much on Rented Farmland
Those who do not own the land on which they farm can end up spending too much cash on their rent.
Cash rents may be the norm, but flexible farm leases—as long as they’re straightforward and provide a fair sharing of risk and reward to all parties—can be mutually beneficial for renting farmers and their landlords. You could consider a fixed bushel lease, in which the tenant gives the landlord a certain number of bushels of crops as part of their rent payment.
Mistake 5: Failing to Maximize Cash Flow by Inefficiently Paying
Some farmers wait until they’re in financial distress to consider how to most effectively reduce debts.
Ensure that you have access to all of your debt payment information, use a maintain a solid relationship with your banker. Once you know where you stand in a financial sense, you may be able to refinance your ag operation, which could enable you to consolidate your debt into one lower interest payment, reduce your monthly payments, and/or alter the maturity of your farm loan and receive longer amortization periods.

   26-Dec-2020 |   Answer by: Ram

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