There were around 180 participants at the August 3 Mid South Ag Finance 10th Annual Conference on the campus of UT Martin. Those in attendance heard a wealth of farm financial management, risk management, policy and marketing information. This is an annual conference and I would highly recommend producers, lenders, suppliers, and anyone involved in agriculture to attend. It is usually the first Wednesday in August, so look for information on the 2012 conference next summer. Dr. David Kohl talked about rules of ag management and I would like to mention a few in this article and will cover additional information in future blogs.
How should producers manage volatility?
Volatility creates opportunity but the stakes are higher.
Three prong risk management programs: revenue, cost, interest rates.
Follow the HUT principle: Hear, Understand, Take action.
Avoid the undisciplined pursuit of more.
What practices could producers use to prepare for economic & policy changes?
Build strong working capital & cash reserves.
Have a sound risk management program.
Watch financial leverage – be careful above 50% debt to asset ratio.
Have sound financial records & systems approach.
Prepare for a 5 year down cycle.
Early warning signs for producers.
More than 5 different sources of credit.
Debt to asset ratio above 50%.
Working capital to revenue ratio below
If we in UT Extension can help you assess your situation and or review your ag management please contact your County Extension Agent or Area Specialist – Farm Management covering your county or in Tennessee call the MANAGEment Information line at 1-800-345-0561.
