Working capital remains one of the most valuable risk management tools available to a farm business. It helps operations weather poor yields, take advantage of marketing opportunities, manage unexpected repairs, and navigate periods of lower profitability.

Corn and soybean prices have moved lower from recent highs, while many input costs remain elevated. In an environment where profitability is under pressure, borrowing decisions matter more than they have in several years.

Dr. Kohl discusses essential business and financial pillars to chart a strategic course for your farm operation in today’s volatile agriculture economy. 

It is essential to avoid recency bias, or prioritizing importance of recent events over historical events. Ensure long-term decisions aren’t based on short-term conditions. Make certain your farm business does not rely on lower interest rates to be successful.

Dr. Kohl emphasizes that a high-level management mindset should be top priority this year regardless of operation size, enterprise, or business cycle stage. Place your energy on controllable variables and manage around the uncontrollable like geopolitics, weather, or unexpected ‘black swan’ events.

Learn about the Federal Reserve’s most recent vote on the Fed Fund rate and what to expect of interest rates in the coming months.