Mid-Year Financial Check-In: What Farmers Should Be Watching Right Now

Planting is in the rearview mirror, harvest hasn’t arrived yet, and you’re still several months away from year-end financial reports. 

But it’s important not to wait until winter to start taking a look at this season’s finances. 

Instead, a mid-year check-in is the perfect time to pause and evaluate your financial position while there’s still time to make adjustments.

A little proactivity in the summer goes a long way in keeping your operation financially strong. It can help flag issues early, identify opportunities to take advantage of, create space to make in-season adjustments, and even make late-season decision-making easier. 

Here’s what farmers should keep an eye out for this time of year. 

What farmers should be monitoring mid-year

Working capital: This is the #1 metric farmers should have an eye on at this point in the year. Take a realistic look at cash flow, and determine whether there’s enough to cover operating expenses, debt repayment, and family living from now until when you collect grain payments. 

Mid-year is a great time to get all records up to date and revise your cash flow projections. With these, you can ensure you have room for any capital purchases or prepays you want to make before the end of the calendar year. 

One red flag to watch out for is needing to use your operating line of credit to cover a term debt obligation. This could be a warning sign about your overall finances. 

If you find yourself in this position, don’t worry. Plenty of producers are forced to make tough decisions like this. Check in with your FBFM team to see how to get back on track or go over other financial management strategies. 

Family living: The middle of the year is a great time to check in on how your family living expenses are tracking. How much does it truly cost to buy food, clothing, and save for a vacation? If current trends continued, would your cash flow be enough to cover the bills? Will some of your family living costs need to come from off-farm income? 

Input costs: A mid-year check-in on your input bills will help you understand where you’re tracking — either compared to the budget you set this year, or to costs you had incurred at the same time last year. Both comparisons can help you identify variances and plan for the rest of the year. 

Transition plan timeline: A quick mid-year look at your finances can help determine whether your ideal transition plan timeline is still on track. The current farm economy is tightening many producers’ finances. Given that environment and your current finances, your 3-year plan might need to turn into a 5-year plan (or vice versa). 

Don’t already have a transition plan mapped out? Summertime can be a great opportunity to begin building one. Reach out to your FBFM advisor or trusted attorney for help getting started. You can also download this free transition roadmap resource. 

All the little things: As a producer, you already know how many moving pieces are involved in a farming operation. Summer is a good chance to check all those smaller boxes that can sometimes fall to the wayside during busier seasons. Think: 

• Make sure your FSA acres are enrolled 

• Meet your property tax deadline

• Pay your estimated quarterly taxes 

• Get your senior citizen exemption (if applicable) 

The power of a proactive mid-year financial review

A summertime financial review isn’t about beating yourself up if things aren’t going according to plan. It’s about giving yourself as much information and time as possible to make informed decisions heading into the back half of the year. 

Timing is everything. And if you can spot a warning sign now, there’s still time to course correct. 

This is especially true when you work closely with a trusted advisor, like your local FBFM Farm Business Consultant. For our farmer cooperators, we run a mid-year projected farm income statement to give a clear picture of where things stand and what can be adjusted over the next few months. We take into account bushel projections, input costs, projected revenue, and even potential crop insurance payouts. 

These summer check-ins are also a great time to let your financial advisor know of any changes to the operation you’ve discussed with other professionals on your team, like an attorney or lender. 

For example, if you’re working on a transition plan with your lawyer, or are thinking about expanding or contracting your operation, mid-season is a great time to let your financial advisor know, so they can integrate that change into overall financial planning. 

If you’ve been talking with your lender about how to expand your operating line, we can help strategize about how to meet their requirements. 

These mid-year conversations help everyone stay aligned about what’s going on on the farm — and whether your current financial projections can empower those goals. 

Most importantly, halfway through the year is a critical time to ensure accurate recordkeeping. Projections and reports are great for building long-term strategy. But they’re not much use if they’re based on out-of-date or inaccurate data. Sitting down with your FBFM Farm Business Consultant over the summer is a great opportunity to dot all the Is and cross all the Ts. 

If you haven’t yet scheduled your mid-year check-in, contact your local FBFM team.