Grow the farm? Farmers grappling with tough decisions in an unpredictable economic environment might wonder where they’ll even find profit.
AEI Management Partner David Widmar says it is possible. Advisors often urge farmers to focus on what they can control. In this episode of Ag Marketing IQ In Depth, Widmar goes deeper, talking about what those things are and offering management tips to help farmers succeed during ag’s down cycle.
Widmar speaks particularly to working capital, cash flow projections, asset management and cash rent negotiations.
- Working capital, Widmar says, is a critical balance sheet metric, one that’s often misunderstood in farm management. “Working capital is a symptom, not the problem,” he explains. While replenishing working capital is important, Widmar stresses the need to address underlying profitability issues.
- Cash flow projections, especially for multi-generational operations, are key to growth. “Cash flow projections can be a key setup for managing towards working capital goals,” he says.
- Asset management is another area where farmers must make difficult choices. Widmar encourages producers to evaluate underutilized assets, including farmland, then consider selling them to free up working capital or reduce debt payments. “These decisions have long-term implications,” he notes, adding that farmers should carefully analyze the benefits and potential tax consequences of selling assets. “It’s about positioning ourselves for future opportunities instead of holding on to frustration.”
- Cash rent negotiations are equally challenging but vital for profitability. Landlord conversations about leased farmland are among the hardest. Widmar advises farmers to start analyzing unproductive fields in the spring to prepare for fall negotiations.
“Don’t subsidize renting a farm with earnings from other parts of the operation,” he warns. “Go in with your numbers and cost structure and be prepared to walk away if it’s not right for your operation.”
All of these things tie into long-term positioning for your ag operation, Widmar says. “Everything you say yes to is a future opportunity you’re saying no to,” he says.
To hear more from Widmar on positioning for profitability in 2026 and beyond, tune in to Ag Marketing IQ In Depth.