Plotting a Financial Path Forward for 2018

Many farmers are struggling with a lack of working capital and are seeking advice on laying out a financial path forward. In a recent article for, Mike McGinnis shares advice offered by John Jensen, a former ag banker who currently works as a farm financial adviser and has amassed significant experience helping farmers in tight financial situations.

Jensen suggests four tips for farmers as they focus on bringing balance back to their financial picture: (1) know the real costs of operation, (2) know living expenses, (3) know cost of production, and (4) know how much it is taking to run the farm.

Some important warning signals that might indicate a farm in jeopardy of financial ruin include the following:

  • Lack of working capital for two or more years in a row
  • Inability to make payments on term loan debt
  • Unrealistic or impractical financial recovery plans
  • Rolling debt from old equipment into new equipment
  • Trouble paying loans even after taking advantage of tax depreciation rules
  • Crop yields consistently running below county averages

Jensen offers some good suggestions for help that farmers in the midst of financial woes should consider:

  1. Analyze the realities of your situation and don’t shy away from the idea of selling some assets to reduce debt.
  2. Focus on developing financial health, not on placing blame.
  3. Communicate with your banker.
  4. Get second opinions from other lenders.
  5. Visit with your area’s Extension office.
  6. Conduct deep self-analysis.
  7. Keep in mind that sometimes lenders have bad suggestions for farmers.

McGinnis closes with three pieces of advice from another adviser, Tina Barrett, in her article “Preparing for Farm Loan Renewal Time.” As they meet with lenders, Barret recommends that farmers do the following:

  1. Be prepared with a detailed and realistic plan.
  2. Be honest with yourself and the lender about the realities of your situation.
  3. Be accountable for the choices you have made and the ones before you.

For more details, read the article in full at