Building a Nimble Crop Farming Business Plan
From global trade uncertainties to climate change, and from volatile commodity markets to hyper-sensitive currency markets, the near- and long-term outlooks for agribusiness revenues and profitability have long been constantly moving targets. Unforeseen emergencies that disrupt supply chains and destabilize produce demand, such as the COVID-19 pandemic, exacerbate these challenges.
A nimble crop farming business plan is more critical than ever. As you strive for success in your farming business, how you react to challenges—and the resources you deploy—can significantly influence your path forward.
Crop farming issues abound
According to the US Department of Agriculture (PDF), there are 2 million farms operating on 900 million acres across the country. For the individuals who run the half of those farms, their livelihood is regularly impacted by industry challenges, including:
- Trade uncertainties: Tariffs and other international trade policies can raise prices on inputs and disrupt access to critical overseas markets.
- Dry and wet patches: Hot, rainless summer months can inhibit yields and require costly irrigation efforts. Conversely, rainy, wet stretches during planting and harvest seasons can derail otherwise abundant years.
- Climate matters: In addition to local day-to-day weather, broader changes in the climate are leading to more extreme weather events, elevated wildfire risks and shifts in the timing of growing seasons that disrupt normal farming patterns.
- Rising costs: Continually increasing prices on key inputs such as seed, fertilizer and labor pile up on overhead expenses.
Furthermore, the COVID-19 pandemic demonstrated that disruptions in the global economy can quickly derail demand for biofuels, create costly bottlenecks at food processors and sever seemingly solid supply chain connections.
Creativity and innovation define solutions
In the face of such obstacles, government farm bills can provide some relief, but long-term survival remains rooted in farmers' natural resilience and resourcefulness. With a boost from today's highly interconnected world, some farmers are experimenting with new options:
- Exploring new markets: If demand from a key market dries up in the wake of tariffs or other market forces, explore new connections both at home and abroad to gauge needs elsewhere. Farmers might also consider diversifying crops to satisfy the demands of their current markets if distribution costs are a barrier to accessing new buyers.
- Bypassing intermediaries: Many farmers have turned to direct-to-consumer sales efforts, marketing their harvest through online marketplaces and subscription-driven community-supported agriculture programs, commonly known as CSAs.
- Sharing the experience: Opening up a farm's operations to tours, croplands to twilight horse rides and orchards to do-it-yourself fruit pickers can build new revenue streams.
- Tapping into niche produce: Away from the global commodity complex, robust markets for specially grown crops have emerged to meet the growing demand for non-genetically modified organism seeds, industrial hemp, specialty hay for livestock farms, grains used by craft brewers and more.
For some, any shift in a crop farming business plan will prove temporary until normalcy returns to traditionally profitable markets. For others, the new angle could provide a lasting element to the future rewards of life on the farm, especially once the current hard times are in the rearview mirror. To assess the pros and cons of your existing and potential crop lines and businesses, reach out to a trusted agribusiness expert today.
Financial insights for your business
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.