FJ's Paul Neiffer has an obligatory interview on what expenses to cut to make your budget work. It is wonderfully vague. He suggests:
- Living expenses
- Farmland and machinery
I have to say, this column does not break much new ground. I mean, have none of us thought about those categories that make up ~90% of our budget? But rather than just criticize, here's where I would aim the axe. And I am.
- Professional services: Cripes, most of us have ag and business degrees. Software has made everything from accounting to analysis learnable with reasonable effort. Stop paying for people to do stuff you can do yourself.
- Accounting. Learn QuickBooks. You might actually begin to understand more intuitively how you earn a living. It is liberating to not ask someone what to do with every dollar. To those who claim that accountants earn save more than they cost, then pay them on commission rather than per hour. If you are worried about doing your taxes, try TurboTax and remember all the IRS asks is that you don't lie - not that you are exactly right. Besides IRS budget cuts means your odds of an audit are vanishingly small. Be honest, you'll be OK. It is not rocket surgery.
- Crop consultants: get off your backside and look at your own fields. Besides the threshold points for spraying something expensive get pretty high when corn is $3. Your fields won't wither if you skip grid sampling for 4 years. You'll be surprised how much advice you've been getting to spend more money was simply to justify advisor fees.
- Market advisors: the rule about passive marketing that is slowly emptying Wall Street also applies to commodities. The average is not to be despised. Sell 1/12 every 12th of the month (or a date of your own choosing). Seriously.
We have confused doing what we are told with doing what really helps. The first step to managing this profit squeeze will be to reassert some of the self-reliance that worked in previous downturns. Things will not be perfect. But perfect is something we can't afford anymore.
Our ship could soon be in extremis, I suggest. The usual recipes for changes may not be enough. Breaking old habits and patterns can mean the difference in outcomes. Keep in mind that any outside help, like handouts from the government, should be bonuses, not lifesavers.
There are solid reasons to strongly disagree with these recommendations on one point of another. But the need to generate your own should be obvious to all but the wealthiest producers.