Harvest is when most farmers are stretched thinnest, and it’s a fair time to ask whether doing everything yourself actually saves you money. Real agribusiness experts explain why the DIY approach doesn’t always cut costs.
Is it any wonder that costs are top-of-mind for American farmers this harvest?
Farm interest expenses have jumped $1.8 billion, adding $15,000-$30,000 annually for a typical 2,000-acre operation. Fertilizer costs remain 30-50% above pre-2022 levels. Corn prices dropped 18%, soybeans fell 10%. Weather-related losses alone exceeded $6 billion (source). The list goes on.
Banks are walking back from loans that our grandparents’ generation had no issue getting, making everything feel harder. The love is still there - the land, the view, the feeling of doing good with your hands - but the stress weighs more each year.
One quote from Jonathon Haralson, co-owner of Texas-based advisory firm Empire Ag, sums up the whole thing pretty well:
“It’s a great lifestyle, but not a great business model.”
The thing is though, counterintuitively, cutting costs by doing everything yourself can actually make things more difficult. By taking on extra risk, burning yourself out, and making avoidable financial mistakes, the DIY approach can increase financial hardship.
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Jonathon and Figured panelists Mitch and Erin spoke together about this issue, discussing how the instinct to work harder isn’t always the right approach.
“We have found that, typically, when you’re wanting to get in control of your finances, or just feel in a better headspace—when the times get tough—[the instinct is] to work harder,” said Erin. “Just get on with it, put your head down, and keep on keeping on in hopes that something will change.”
“But managing your finances isn’t a problem that you can really work harder through, especially when you’re on your own.”
“ Somebody's got to be the mechanic, the parts-getter, and you're trying to wear so many hats,” said Jonathon.
“Do any of you ever feel like you’re half-hearted in? You’re trying to farm, but yet you’re trying to be the accountant, you’re trying to get all the reporting for the banker, and you’re trying to keep everybody happy.”
“We’re out there alone a lot of times. And so not only do you have all the stuff breaking around you and you’re trying to put the pieces together, you’ve got that negative mental loop that you’re just having to dissect and live through.”
Getting caught in that loop - struggling to do everything, pulled in every direction - can draw your attention away from the little details that have a big impact, and that’s where things go wrong.
Great farmers make mistakes, it’s normal. But great farmers can make more mistakes when they’re doing everything themselves. Jonathon has seen it firsthand.
In one story, he explained how a farmer came to him with a balance sheet showing $2.4 million. His bank had him down as a distressed loan, affecting his ability to get new finance. But when the Empire Ag team dug into the actual appraisals, taking just 80% of that estimated value put the farmer’s actual value at $4.2 million. His balance sheet was lying to him.
In another story, a corn crop farmer came to Empire Ag thinking his profits were healthy, he was on track to reach break-even. But he hadn’t fully factored his indirect costs, which added $1.15 per bushel to his costs - pushing breakeven past what he’d planned for.
So you see, missing details isn’t a matter of a few bucks here and there, it could be worth $1.8 million in underestimated value.
Learn more: How to Get Bank-Ready as a US Crop Farmer
Farming has never been so volatile, leaving no wiggle room for missed opportunities.
“Some of our farms go from looking at a projected net of $600-800k,” said Jonathon, “and then in one season we could see that shift all the way to losing $150-200k.”
When you’re acting as your own accountant (plus all your other hats), it’s not easy to make time to study the books enough to see the swings coming - let alone plan for them. And the banks know it, that’s why they’re walking back on agriculture loans.
The modern American farmer needs better financial backing: people and software that help make decisions quickly and efficiently so that when opportunity knocks (say, the neighbor’s 500 acres hitting the market), you can run the numbers fast enough to make a call.
As Jonathon put it: "This isn't your 1950s through ‘70s timeframe that your father or grandfather farmed through. You have to be a better manager. You have to be an active participant in the markets."
For decades we’ve celebrated the self-sufficient operator - the farmer who handles everything alone. But the most successful row crop operations today have built something different: “The Farm Team”, a collaborative network bringing specialized expertise to complex decisions.
“Farmers are awesome on the farming side,” said Erin. “It takes an extreme amount of expertise to be able to be in this industry. But accountants are really great with the numbers. They’re best positioned to deliver that advisory.”
Right expertise, right place, right time. Just like any other business.
The ideal farming team has 4 key players:
“When you bring all members of that team together,” added Erin, “it allows you to leverage unique and special skills, rather than working through things alone or putting your head down—working harder.”
It also increases collaboration. Erin went on to explain that having a great team around you lets you bounce ideas around, get different perspectives, learn from the experiences of someone’s other clients—all of which make it easier to make smarter, informed decisions.
Short answer? Yes. And with wages up 71% (UF IFAS), it’s natural to be skeptical.
But the real point here is…how much can a connected farm team save? Or better yet, increase your profit.
For Empire Ag’s clients, that’s been millions of dollars in lost value, more accurate break-evens, and better deals at the bank. Plus savings on all the added extra costs that come along with finding and fixing errors (or, worse, not finding them at all).
“ As producers, we're all tight. We don't want to spend money,” said Jonathon. “That's just the God's honest truth.”
“Lay the stress down. Get that away from you. It will make you a better businessperson, I promise. I’ve seen it, witnessed it.”
If harvest has you wearing too many hats again this year, and you want to focus less on doing everyone else’s job and more on yours, the path forward is through sharing the load.
Learn more about how Figured is helping American crop farmers. Or, download the free Farmer Starter Pack to see more about how to get started.