6 Improved Cash Flow Operations

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6 Improved Cash Flow Operations

How will you improve your operation's cash flow for 2026? Here are ways 6 different operations across the United States have made it work for them. Can you pick out a few ways to explore for the sake of your bottom line?

1. Ag Tourism to the Rescue

How my family and I improve our operational cash flow is through diversification. We have started to diversify from row crops into adding u-pick strawberry fields and u-pick pumpkins. This has helped us get more cash flow and it has gotten us to the point where we don’t have to get any loans from the bank. We cover all of our expenses out of pocket so we don’t have to worry about interest payments and loans. We are hoping, in the near future, to also expand into having a petting zoo and maybe one day having food from the farm and ice cream for sale at the farm. We believe ag tourism is a huge profit opportunity in our area (Virginia Beach) because there is a ton of people visiting every year to go to the beach so we are trying to capitalize on our areas highest income producer. -Bailey F.

2. Small Grains to Cover Cash Flow Gaps

I am a smaller farmer with a full-time off the farm job so I try to take advantage of every opportunity I can to save money and improve my cash flow. In order to do this on my operation, I have brought back small grains into the operation. Summer harvest of wheat brings in cash to cover in-season expenses like fungicides, foliar nutrients, and pre-harvest repairs. I am also enrolled in a local soil and water program that pays for use of cover crops, subsurface phosphorus placement, and developing a nutrient management plan. This payment comes in around spring and early fall. In recent years, I have upgraded my grain transportation equipment to allow me to haul more myself and not have to hire extra help. I can also gain money per bushel by being able to truck the grain directly to the end-user. Finally, I will trade equipment and labor with a couple neighbors so I don’t have to own and maintain as much equipment. -Garrett J.

3. Government Contracts Pay Big

I have been growing my service company which sprays roughly 45k acres a year with drones. Now I am getting into government spray jobs with them. I also truck manure in the off season. This keeps me very busy and away from the farm so I am implementing robots potentially for the dairy as well as automating our grinding of feed and repurposing a silo. Finally, we are updating our planter to precision meters and airbags. All of this would not be possible without the extra service companies I'm running for income. -Andrew A.

4. Have a Plan, Stick to It

It is a systems approach. #1 Apply the 5% rule (take your last year’s expense sheet including every cost and multiply it by .95 and that is your new budget). #2 Make a marketing plan and stick to it. This needs to be made at least in the combine if not earlier for the next crop. #3 Not buy too much real estate and or equipment. Some is fine but need to run the numbers on every purchase. #4 Not refinance. Even though this is an option it is not a long term fix. #5 In the growing season focus on the crop needs. For example, if the beans need a spray trip, prioritize that over anything at that time. #6 Be efficient, it will improve cash flow. -Ray E.

5. Livestock Balances Cycles

As a young farmer I am utilizing the synergy between my row crops operation and owning hogs. I am leaning into the profitability of the hogs and expanding as an integrator to walk off my corn through hogs. I am also diversifying into a small scale feedlot for locker beef. I am also helping out my cash flow situation with addition by subtraction; I have stopped renting 200 acres that are not profitable, attempting to get as lean as possible. -Chad S.

6. Job Supports the Farm

I took a job out of college selling crop insurance to try and gain some experience and knowledge in the industry before I return home to farm. On top of crop insurance, we do financial analysis and some consulting work. I have been fortunate to work with producers on their financial statements and see what it takes to run a profitable operation. Because of the consistent cash flow I have had from my 8-5 job, it has allowed me to buy some feedyard cattle with money in savings. If I was farming full-time, I may not have had the cash to do so. If things continue to go well in my current role, I will continue selling crop insurance and help producers while I am farming with my family. Since I graduated from college, I have tried to improve my family farm’s financial awareness as well. I reworked our crop budgets to make them more precise, and easier to apply “what-if” analysis on. I will be involved with the end of the year planning this year. I also have taken an active approach in our grain marketing plan - working with local end users on potential basis pushes, paying attention to the board price to look for good hedging opportunities, and trying to make myself aware of all the grain marketing strategies that are out there. One of the ways we have been able to improve cash flow over the last several years was to change our cattle strategy. We have started to buy some cattle in the yard with excess cash. We have also decided to start weaning our calves instead of selling them right off the cow. We realized we didn’t need the cash right away and the ROI was very significant to put a few hundred more pounds on them. We are shopping around for fertilizer more aggressively and have started to slow down equipment upgrades to tighten our belts. We are always looking for ways to improve, and I believe that cash management for the farm is a huge opportunity for us. -Lane K.

Summary

There are thousands of ways you can make management or operational changes to drastically improve the profitability of your farm. Most of these ways don't have anything to do the income or expenses of the crops or livestock you are currently raising. If you get stuck and keep hitting your head against the wall in your cash flow projection trying to make it work, it's time to think outside of the box.

Need help with your operation's financials?

I have limited spots available for 1-hour consultations helping you:

• Understand your farm's financial position.

• Prepare for future growth opportunities.

• Discuss purchase & finance options on farm transactions you are working through now.

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

https://calendly.com/grant-farm640/60min

Have a great week!

Grant