Producers Must Make Strategic Decisions Regarding Investments

Wednesday, February 21st, 2024 -- 8:00 AM

(Wisconsin Ag Connection) Record high farm income in 2022 drove Wisconsin farm businesses’ interest in new revenue streams, markets and technology.

However, according to the Wisconsin Ag Connection, in 2023 producers encountered increased interest expense, increasing debt and reduction in working capital due to lower than expected prices, increase in overall production costs, and a decline in USDA assistance.

As a result, producers must make strategic decisions regarding how well an investment will reduce costs, increase revenue, or both. Additionally, businesses must analyze decisions based on potential volatility in the event of another market shock.

Producers need to perform financial analysis, assess feasibility, and employ risk management practices in order to make informed decisions for a profitable business. In particular, beginning, early career, and specialty crop farms have increased financial and risk management challenges.

They typically own fewer assets and experience barriers to accessing financial capital. Research shows a lack of understanding of risk management practices, a need for financial education, and help identifying strengths and weaknesses of their business to assist them in making decisions. They also seek an opportunity to implement newly learned concepts into their decision-making process to assess and improve their farm profitability. 

When making business decisions, farmers rely on trusted partners such as consultants, lenders, and other types of service providers as well as agriculture associations and producer peer groups.

These partners in turn rely on Extension for objective, research-based farm business management information and resources. They also help improve and increase Extension’s impact by informing program development based on farm business needs and collaborating with Extension specialists to deliver and evaluate programs.

These partners are key stakeholders of Extension programs; their relationship is critical to developing and implementing curriculum, tools and resources that result in profitable farm businesses.

Feel free to contact us with questions and/or comments.