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1% Better

Writer's picture: Grant WieseGrant Wiese
Which way will markets turn in 2025?
Which way will markets turn in 2025?

NE Current Events


There is often a disconnect from individuals, believing that because the Federal Reserve decreased their rate, mortgages are also cheaper.


Your fixed interest rate farm loans and house loans work more along the 10-year Treasury yield, and that rate at the start of 2025 is higher than all of 2024.

2024 Fed target rate vs 10-year Treasury yield
2024 Fed target rate vs 10-year Treasury yield

SW Financial Literacy


Have you updated your financial statements for the year?


Did you complete a review of your position with your lender?


If not, this is a dangerous step to skip. How will you know if you are in a position to buy ground (and how much ground) without getting a lender's feedback? How can you learn anything new without a review?


If you missed this crucial step during your renewal appointment, there is still time. I've opened up 30-minute financial review consultations helping you:

  • Update your balance sheet for the year if not yet completed.

  • Give feedback on the strengths and weaknesses of your position.

  • Help you plan for growth.


Sign-up here if my services can benefit your operation:


Also, I want to continue bringing you the resources to help you grow while in a healthy financial position. If you ever have an interest in the Farm Buying Toolbox, sign-up here:


I can’t wait to be in touch and start helping you toward your goals.



NW Call to Action


1% Better

An old saying that you should take seriously.


I'm deep enough into updating balance sheets this year to know that 2024 was a struggle for most farmers. You know this and probably experienced it yourself.


While there were some strong yields, the price of many inputs was at or near record highs which was just too much to overcome with declining commodity prices. The loss of Working Capital levels was extreme. For many, over $500 of Working Capital per acre has been lost in the past two years while equity is starting to go backwards as well.


Cash flow projections for 2025 don't paint a pretty picture that things will be turning around. Many surveys I have run show input prices have not declined as we prepare for the upcoming crop. What is a person to do?


I don't accept a ‘head in the sand’ approach. Those who are active with their financials (and suppliers) can find a way to make things work.


While large-scale financial restructuring or adopting complex systems may seem out of reach for many farmers, the key to long-term financial health can lie in small, consistent improvements. By striving to be just 1% better in the way you manage your finances across every aspect of the operation, making substantial progress toward improving your bottom line. These incremental improvements don’t require radical changes but rather a mindset shift toward efficiency, accountability, and strategic decision-making.


Here is a cash flow presented to me by Farmer Rick. He puts in time to research his figures his numbers, is conservative with yield estimates, and is projecting a loss of $71,975 for all his hard work this upcoming year.


Not ideal and not something I want for you.

Rick's 2025 Cash Flow Projection
Rick's 2025 Cash Flow Projection

Here is what I recommend Rick spends the next month working on:


1% Better

Let’s go through the line items and see where we can try to make some improvements.


  • Corn Sales- Last year Rick’s average sale price was $4.39/bu. He sees an opportunity to put some floors and targets in place and knows he can average closer to $4.47/bu with a small summer rally.

  • Custom Hire- There hasn’t been custom hire income previously, but he asks around and gets a few acres to spray for the upcoming year.

2025 Projected Income with 1% Better
2025 Projected Income with 1% Better

2 simple actions, $13k in additional revenue. Let’s move to expenses.


  • Chemical- Rick checks with his supplier and there is a generic product that has been successfully used the past few years. He saves $560.

  • Custom Hire- He negotiates his custom hire rate marginally lower. He saves $260.

  • Fertilizer- The buildup of his fields has been successful; he chooses to maintain instead of continuing the buildup. He saves $620.

  • Fuel- Cattle are run on the stocks and he increases his no till acres. He saves $205.

  • Insurance- In checking with other producers, he is probably over insured for his APH and lowers his coverage. He saves $920.

  • Rent- He explains that tough times are ahead and promises to share all yield and crop data with his landlord, giving a full report of his profits in exchange for better rental terms. He saves $1,295.

  • Repairs- The plan was to upgrade some technology in his tractor. With the tight margins he decides to wait a year, this time saving a bit more than 1%. He saves $5,000.

  • Seed- In checking prices with a competing seed dealer, he can get a new customer discount to move over ¼ of his acres. He saves $610.

  • Property Taxes- No savings here!

*Please note, not a single one of these items requires you to exit existing, successful relationships.


Here’s how we did.

2025 Projected Expense with 1% Better
2025 Projected Expense with 1% Better

Around $10,000 in savings! Not bad, but still not enough to become profitable. At this point Rick gets the point of the 1% exercise and starts looking into other areas where cuts (improvements & efficiencies) can be made.


  • He can’t do anything with his land notes or home payments, but he does decide to sell his boat. They only took it out twice last year and can borrow a friend’s if needed. He saves $14,000.

2025 Projected Loan Payments with 1% Better
2025 Projected Loan Payments with 1% Better
  • The couples’ trip with friends to Mexico is a luxury that can wait. They still have a family trip with the kids planned anyway. He saves $10,000.

  • Rick was hoping to replace the grain cart and a few augers this year. A good welder can get him by during tough times. He saves $37,000.

2025 Projected Other Expenses with 1% Better
2025 Projected Other Expenses with 1% Better

How did Rick do? Drumroll please……

1% Better 2025 Cash Flow Projection
1% Better 2025 Cash Flow Projection

Rick improved his cash flow position by $84,000 and is showing a net positive!


I have seen every single one of these actions be taken to improve a position, and often the improvement is considerably more than 1%. What if there was a 10% decrease to the cash rent, seed bill, or insurance premium?! You will never know until you take action or ask.


Conclusion

The difference between a struggling farm and a thriving one often lies in how well you manage the financial aspects of their operation. Being just 1% better at managing money across all areas of a farming business can lead to substantial improvements over time. From cutting unnecessary costs to improving resource management, each incremental change contributes to the long-term viability and success of the farm.


By focusing on small but consistent improvements, you can position yourself to weather economic uncertainties and achieve sustainable growth. The path to financial success may not always require grand changes—sometimes, it’s the little things that make the biggest difference.


Have a great week!



Grant

Farm640

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