As farmers prepare for the upcoming growing season amid higher interest rates, higher input costs, low crop prices and a trade war to boot, managing books on the farm are more important than ever.
“Riding out the storm” might suggest hunkering down and staying with familiar management, but for those grinding through another year and looking at more downturn in 2026, taking action might be the best thing to do.
Nutrien Financial area manager Jordan Howe offered advice from Nutrien as well as from his own family farm experiences. Staying up to date on bookkeeping should be a priority, especially during tough financial times, he said.
“This can be very tricky for growers based on the seasonality of their jobs [and] of their lives,” Howe said. “Sometimes they find themselves away from their desk or computer for potentially months at a time.”
Thankfully, monitoring and adjusting financial plans doesn't have to take a ton of time and energy, partially thanks to the wide array of digital tools available. Apps and digital platforms can connect the details of your crop and your financial plan to make it simple.
Follow these tips to help weather the storm:
Keep an eye on costs. Keeping a finger on the pulse of farm finances, at least monthly if not weekly, will ensure farmers have an overview of what’s happening in their finances.
“My focus with bookkeeping would be to make sure we’re looking at statements, seeing invoices due and staying up to date,” Howe said.
Know everything that goes into producing your crops, land, inputs, machinery, interest and more. Watch these expenses, and understand the breakeven costs.
“Due dates will vary, and the worst place we can find ourselves in is having to pay something past due with high interest charges,” Howe said. “Don’t just wait till harvest. Anything we can do throughout the season is beneficial.”
Watch for rewards. More financial programs are available to producers today than ever before, Howe said.
“I’ve been in the professional world for 13 years, and the options available in today’s world versus 10, 20 years ago are so much better than they were in the past,” he said. “It’s critical for growers to understand what’s available to them out there, partnering with experts they trust.”
Most importantly, ask questions of those trusted partners to get the most out of their program offerings.
Offerings from Nutrien Financial and Nutrien Ag Solutions bring specific benefits for growers.
“We offer competitive rate programs, which we partner with our suppliers to be able to offer customers options that fit their needs,” Howe said. “The goal is to be able to offer terms that align with growers’ cash flow to put them in the best situation to mitigate the stresses of the season, but also to provide them flexibility on their operations.”
Work with trusted farm financial advisers — making it a priority to collaborate with local, expert financial advisers — because not every program is meant for every farm. Find a financial planner who can align a plan and a program for the operations on each farm.
“Rely on the trusted relationships they have, rely on the program experts that they already have at their disposal, but finding these programs and experts looks different to everyone,” Howe advised.
Within an operation, find one person to spearhead finances, selecting the person who is the best suited and focused on keeping track.
“I look at our operation, and for the last 40 years my dad has been that person,” Howe said. “As an operation may be transitioning a little bit, it’s also pretty easy for the person who has taken care of that role, for the finances to be their baby, and they have it taken care of.”
With numerous options to take crops to the next step and increase return on investment, look out for opportunities, cost savings and advantages.
Consider alternatives. What farmers were doing 40 years ago, or even 10 years ago, isn’t what they’re doing now. Why? Because of alternative revenue streams.
“If there’s opportunities for alternate revenue streams for an operation, that can put us in a more secure place,” Howe said.
But how can you get started?
Start off by asking yourself business strategy questions such as “Where do we want to go?” and “What is the best way to get there?”
Take your farm’s strengths and put them toward a need in the marketplace. Think 10 to 20 years in the future. What do you want to accomplish?
Maybe you want to add livestock to your row-crop farm, a seed business, an on-farm supply shop or custom harvesting. Everything you choose to add will have trade-offs, but think about what businesses might even add benefits to your main farm business. An example of this would be a row-crop operation diversifying with hogs, and then utilizing the hog manure to fertilize crop fields.
Whichever direction you choose to go, treat your additional revenue source as a stand-alone business. Create a profit and loss statement for it separately, and understand your costs, pricing and profitability.
Tax prep the right way. Learning how to maximize farm incomes while limiting tax bills can be quite the endeavor.
“Most of my end-of-year conversations revolve around how to maximize after-tax dollars available to pay for living expenses and loan principal payments,” Kansas Farm Management Association economist Dillon Rapp said. “There are many benefits afforded to us in the lower tax brackets, most of which can only be taken advantage of with the right level of positive income, so it’s best to avoid a net operating loss if possible.”
Ensure you have a good record-keeping system to accurately detail your farm income and expenses. If you wait until the deadline, you won’t have the opportunity to plan ahead. Tax planning is usually a four-step process:
- Determine what your taxable income is to date.
- Project income and expenses through the end of the fiscal year.
- Calculate the tax liability on that income.
- Figure out what adjustments you can make to your tax liability based on that outcome.
When preparing to file taxes, farmers should consider if they’re anticipating a negative income year. If so, it might pay to consider taking out a CCC loan and electing it as income on tax filings.
“CCC loans were designed for farmers in the very situation we find ourselves in this year, where prices are low and holding grain to wait for higher profits makes farmers short on cash,” Rapp said. “CCC loans can be elected to be treated as income on tax returns, so in low years, it might be worthwhile to take out a loan to raise taxable income.”
No matter what type of operation you run, good financial management and preparation are integral to having success in 2026.
“Don’t forget to utilize the resources available,” Howe said. “Work with people you trust, and don’t forget to read the fine print on financing options and programs.”
Editor’s note: Raney Rapp contributed to this article.