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There are a lot of mixed messages on the agricultural finance front these days. For example, on March 31, the USDA National Agricultural Statistics Service (NASS) released its 2021 Prospective Plantings Report, which said that U.S. farmers planned to plant an estimated 91.1 million acres of corn and 87.6 million acres of soybeans in 2021.

  • That’s less than 1% more corn acres than were planted in 2020.
  • That’s approximately 5% more soybean acres than 2020.

However, those numbers are also LESS than what the USDA had predicted growers would plant in statements made at the 97th annual Ag Outlook Forum, just a month before. The interpretation of the USDA announcement and the acreage predictions varied – some prognosticators said growers planting fewer acres than USDA thought in February would mean tighter grain stores and potentially sustained higher commodity prices. Others said the numbers showed intended plantings were not varied greatly from 2020, unsure if high commodity prices would be sustainable.

Other factors are adding to the turbulent dynamic in global agriculture:

  • Experts are still calculating the long-term effect of last February’s deep freeze, especially its longer effects on the fuel, rubber and plastics industries and any other manufacturing that is highly dependent on petroleum.
  • In some areas, interest rates, which for months had been at historic lows, are showing signs of creeping upward again – what does that mean for the nation’s crop producers?
  • Will the Brazilian harvest be good, bad or indifferent? How will that affect global commodity prices?

In the face of so much turmoil, experts advise growers to stick to best financial practices to allow them to navigate the potentially tricky waters of the upcoming growing season. We talked with Jason Brown, Area Manager with Ag Resource Management, and Ashley Arrington, ARM’s Real Estate Division Manager, about these practices, and here’s what they recommend:

Build Working Capital

Before taking on additional debt, analyze upcoming financial needs and expenses, and work on having enough cash on hand to deal with those “known quantities” without needing a loan.

“Having cash on hand allows a grower to take advantage of opportunities,” explains Brown. “This is especially important in times where commodity prices look good and opportunities, such as land acquisition, will pop up quickly and won’t last long. The grower with a solid source of working capital is going to be able to snap up those opportunities much faster than a grower who has to find financing.”

Restructure Debt

Growers have a tremendous opportunity to restructure debt right now, due to historically low interest rates combined with sustained high commodity prices. In this situation, loaning to growers looks like a good move for most financial institutions.

“Take a look at your debt scenario in terms of your long-term debt,” recommends Arrington. “You might have the opportunity to restructure debt and lock in a lower interest rate and lower payments. Restructuring debt now will help growers get through future downturns in the market by locking in those low interest rates and low payment schedules, which will help them navigate market ups and downs not just in 2021 but in coming years as well.”

Re-Evaluate Break-Even Estimates During the Crop Year

Both Arrington and Brown emphasize that with prices of so many inputs fluctuating, and some distribution chains still experiencing disruption, it’s important for growers to update and re-evaluate their break-even numbers and profit potential throughout the season.

“Growers who need an in-season input—such as a post-emergent herbicide, fungicide, insecticide or additional nutrients—might find that higher-than-expected prices might affect the break-even numbers they calculated back in December or January,” cautions Brown. “We work with our growers to look at that plan throughout the season and make adjustments if prices of needed inputs, fuel or other factors could affect their break-even and potentially, their profitability.”

For more information about how Ag Resource Management can help you with financial planning, financing and risk management, visit