Financing through times of high rates
A farm financial officer says knowing the true costs of production are critical during times of high interest rates and inflation.
Sarah Adams with Farm Credit Mid-America tells Brownfield margins are getting slimmer which means there’s less room for error.
“If you know what it costs to produce something, then you can make decisions upon that, but if your breakeven is incorrect, maybe you’re not including family living expenses, we really don’t want to be making decisions on buying that farm or buying that piece of equipment if we’re using the incorrect number,” she says.
Adams says taking on short-term debt now for some purchases might be a solution to reducing higher interest rate operating loans in the year ahead.
“We know right now operating rates are higher than intermediate loan debt,” she says. “So maybe we should finance that equipment purchase right now and then that way it keeps us from having to use a higher interest rate operating money now and in the future.”
Adams also recommends looking for savings accounts that keep cash liquid while earning higher interest rates.