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From Farmland Purchases to Marketing: Avoiding Emotional Decisions on the Farm

Date: 
Author: 
Glenn Wachtler
Educational Opportunities: 
Articles
Interests: 
Grain, Dairy, Swine, Young, Beginning Farmers, Women in Ag
Home > Education & Events > From Farmland Purchases to Marketing: Avoiding Emotional Decisions on the Farm
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Have you heard this quote? “Farmers don’t want to buy every piece of ground, rather just the ground that touches theirs.” As you can imagine, these words were meant to get farmers thinking about their approach in considering land purchases.

Compeer Financial has published an e-book which examines the “Top nine things to consider when purchasing farmland.” This e-book goes into greater detail of the different considerations in farmland purchases ranging from research and financing to putting an exit strategy in place even if that plan is 30+ years down the road.

How to Make Wise Decisions.
In farming, like any business, it’s important to be as objective as possible when making decisions impacting the operation. There are some basic questions you can ask yourself that may help you avoid making emotional decisions.
  • How will your financial position be affected?
  • Working capital is be important in compressed margin years, will the purchase leave you enough cash on hand?
  • Does this purchase raise or lower your overall cost of production?
In the end it’s essential we treat each purchase with practical business decision making and not merely a dream fulfillment opportunity. At the same time, we must recognize and understand the intangibles such as proximity to other land in which efficiencies will be gained.
  • Is another building site needed for a younger generation?
  • Have you considered what existing property you would sell if required?
Land purchase decisions will have some form of emotional influence on most buyers. However, we must do our best to make wise decisions for ourselves and for our farm and family.
Another part of the farm business that tends to be an “emotional rollercoaster” is grain marketing. Making decisions based on feelings can lead to lots of confusion, second guessing and regrets. What if you want to avoid that unpredictable rollercoaster ride?

Review the land purchase tips above, the same rules apply to grain marketing. Grain markets can heavily play into emotions when a written and executable marketing plan is not in place. If you’d like to get away from this rollercoaster ride homework is a must.
  • Know your cost of production, what profitable and realistic sale price(s) are, and what the timing of each sale, etc is.
  • A marketing plan can be as simple as selling grain at three to four different times of the year, you could add on sales if prices reach a certain point, but avoid pushing all of the sales into the later part of the marketing year.  
Whether you’re buying a farm, marketing grain, or purchasing a new combine market research is vital to understand your competition and how the transaction will affect your financial position. Ultimately sound business decisions align with your goals of protecting equity and/or growing your farm.  

Read more insights in our Compeer Financial production agriculture blog.
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