It doesn't look like low commodity prices are going away in 2017. This means that farmers will have to be extra vigilant in their budget in order to stay in the black.
Barry Ward, agricultural economist at The Ohio State University, says the key to remaining profitable is to stay on top of input costs.
Ward shares 9 strategies to turning a profit.
1. Reevaluate crop production inputs such as prophylactic fungicide applications and specialty fertility products.
2. Forgo phosphorus and potassium fertilizer, if soil tests show there's enough in the ground for the coming crop.
3. Review and adjust nitrogen rates and application timing.
4. Re-evaluate seed technology. Seeds with fewer GMO traits are usually less expensive," Ward said. "But this will require more management time- you may have more weed pressure, more inspect pressure. You need to weigh the pros and cons- and if you've done some on-farm evaluation, you will know what works and is worth the investment."
5. Eliminate excess equipment and re-evaluate equipment sizing. "The secondary markets are soft, so it's not the best time to sell excess equipment. If there is a true need for equipment, this would the time to buy," he says.
6. Renegotiate cash leases. "The economics of the past three years have cried for a lower of cash leases, but they have held up because of equity positions on behalf of farmers and landowners' property taxes," Ward says. "Landowners need to understand that margins have declined and lease prices need to come down."
7. Consider more do-it-yourself repair and services, including spraying, soil sampling and equipment repair.
8. Evaluate farm yield rations with price ratios when determining crop mix.
9. Re-examine family living expenses. "It's not easy t do," Ward says, "but family living expenses need to ratchet back to pre-2006 levels." According to the Illinois Farm Business Farm Management data, family expenses were $85 per acre in 2006, compared with $110 per acre in 2015.