Researcher Weighs In On Importance Of Cutting Operating Costs

Why are some farmers doing fairly well in this farm economy, while other operations struggle, with some even slipping into bankruptcy?  Dale Nordquist, associate director at the University of Minnesota’s Center for Farm Financial Management, said contrary to what you might think, age has nothing to do with the success rate.

“Young producers are doing very well on average.  So, the beginning producers are really performing very well.  And it’s not really size related.  We see struggles in both the smaller producers and the larger producers.  But, of course if there are problems with larger producers, it gets multiplied.”

Nordquist added it’s not age or size, but controlling costs that determines success and future viability.

“We see a huge difference in terms of per acre costs for all of the different inputs.  And it’s consistent.  A producer who’s paying more for inputs will consistently pay more for year after year after year.  A producer who is paying less somehow, is managing to pay less.”

Nordquist says he couldn’t speculate how those farmers surveyed were paying less for their inputs; the data did not go into that detailed information.  But he added successful farmers over the years have paid less for seed, less for fertilizer, less for every input including rent.  He noted when you add all of that up, it can save hundreds of dollars per acre.

He noted the key to getting costs down, know where you stack up to similar growers, and communicate with your spouse, farm managers and your farm lender.

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