By Leah Maertens
To be published by Dakota Farmer at farmprogress.com
Do you have a pretty good idea of what this year’s crop actually cost?
By now harvest is wrapping up, the equipment is getting parked and the bills are starting to tell the story. Now is a good time to step back, look at the numbers and think about what needs to change before making next year’s commitments.
It’s easier to look back now and ask: “What did we spend, and was it worth it?”
Maybe a piece of equipment didn’t get used as much as expected. Maybe repairs were higher than usual. Maybe there are subscriptions, services, leases or other expenses that have simply become part of the operation without anyone stopping to ask whether they still make sense.
Equipment is a good example. Don’t look only at the payment. Think about the full cost of owning and operating it, including repairs, maintenance, fuel, insurance, interest and depreciation. Compare that with how much the machine actually worked this year. A high-priced machine that gets used hard may be money well spent. One that spends most of the year sitting may deserve another look.
The same goes for labor, insurance, buildings, land costs and debt. And don’t forget your own time. Just because you’re doing the job yourself doesn’t mean it doesn’t have a cost.
It’s also important to separate expenses that tend to stay the same from those that rise or fall with production. Seed, fertilizer, fuel and feed are necessary production expenses, but they behave differently than a machinery payment or building expense that continues whether prices are good or bad.
November gives farmers a little breathing room to look at all of it before seed, fertilizer, equipment and other commitments for next year are locked in.
The goal isn’t simply to spend less, it’s to make sure every dollar committed to the operation has a purpose.
Maertens is a North Dakota Farm Management Education Program instructor at North Dakota State College of Science and writes from Wahpeton. The North Dakota Farm Management Education Program provides lifelong learning opportunities in economic and financial management for persons involved in the farming and ranching business. Visit ndfarmmanagement.com, Facebook @NDFarmManagementEducation, or contact Heather Lang, State Supervisor for Farm Management Education, at hlang@nd.gov or (701) 328-2308 for more information. The ND Farm Management Education Program is sponsored by the North Dakota Department of Agriculture.