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Understanding farm financials to manage risk

An ag lender says learning how to understand on-farm financials will help farmers better manage the downside risk in agriculture.

Gary Matteson is an expert in beginning farmer loan programs with the Farm Credit Council.  He says young farmers and ranchers need to have a business plan in place that focuses on three basic business skills: financial, production, and marketing.

Matteson says the financial section is by far the most complicated.  “It’s understanding those financial statements and projections in a way that doesn’t turn anyone into an accountant – but lets them manage their business,” he says.  “To have clear expectations and to have clear goals – in numbers – and be able to perform to those goals.”

He tells Brownfield ag is a high risk industry – with moderate returns.  “Fasten your seatbelt – the volatility isn’t likely to go away,” he says.  “The way global markets work – if you’re in a commodity production business – margins are going to shrink.”

Matteson spoke at the Farm Credit Mid-America Know to Grow Conference in Indianapolis on Monday.

AUDIO: Gary Matteson, The Farm Credit Council

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