Automatic lien laws in a handful of states offer protection for custom operators, but knowing how to enforce them – and what not to do – is just as important.

How can farms rise above financial risks and a volatile market to eventually move toward growth? Three dairy producers opened up about their journeys and offered honest insight during a recent panel discussion.

When looking at your balance sheet, one of the big questions to ask is: How hard is your debt working for you? That is, are you making money on what you have borrowed from others? We often look to the numerator first to see what is happening there. Revenue is a great place to start, but we also need to look at the debt schedule. 

Making sure the farm is financially organized could be a key to running a successful and sustainable operation. Unlike many other industries, farmers are faced with unique challenges such as fluctuating market prices, unpredictable weather and potentially volatile cash flows. Ensuring you are aware of the current financial position of the farm by creating accurate and timely reports can allow you to make quick decisions when necessary.

The challenges facing today’s dairy farmers are vastly different from those of previous generations. Rising costs, environmental regulations and technological advancements have created a complex and competitive environment. For the next generation poised to take over family dairy farms, financial literacy is not just an asset; it is a necessity.

Whether we’re at the high point of a cycle or in the depths of a downturn, the best managers regularly manage their margins. They understand that margin management is an “always” mindset, one that builds stronger positions during the good times so they can get through the bad.

The current business climate of high interest rates and ongoing inflation is challenging. It requires business owners to be proactive and strategic with cash management, debt management and requires an overall increased focus on every aspect of the business.