Financial planning tips to increase profitability

August 2023 FloridAgriculture eNewsletter

Justin Little
Financial Expert
Nutrien Financial

The financial health of the operations Florida growers manage depends on several variables: weather, commodity prices, interest rates and other market-driven fluctuations that impact costs. Florida growers face some of the most extreme conditions in the country, which only exacerbates these uncertainties. You can’t influence a lot of these variables, like the timing of the next hurricane, diseases pressure or changes in interest rates, but proactive management of your money with financial planning can create some certainty to take pressure off your profitability equation.

If you don’t have a financial plan, or haven’t revisited it in a while, it’s a good time to have a conversation with your crop consultant and folks in your circle with financial expertise. Building and maintaining healthy farm finances requires partnership and communication with people who have both agronomic and economic expertise. With that information, you’ll have the best view of where you’re at, where you can go, and the support you need to make more profitable decisions.

After the Federal Reserve raised interest rates to a 22-year high in July, the cost to borrow money is one area that Florida growers can look to for savings. Here are some tips to consider:

  • Shop for a fixed interest rate to pay for input purchases, which helps create a bit more stability for your budget.
  • Look at seasonal offers and promotions that your preferred products might offer, which tend to come with more attractive rates and flexibility to leverage your operating line of credit.
  • Pay attention to details beyond the rate, including how interest accrues and how well the terms fit your unique cash flow needs.

And don’t forget that the most useful financial plan is the one that reflects your current state. With Florida’s ideal climate, many growers manage multiple crop cycles throughout the year. Every time a crop plan shifts, which may happen frequently for some growers, it’s time to reevaluate and adjust your financial plan to protect profits.

In today’s market, it costs more to produce a profitable crop, even when you have quality and output on your side. Florida farmers might feel like they’re backed into a corner with contracts that aren’t returning as much because of rising costs, but there are ways to improve your return, and it starts with financial planning.