With financial pressures mounting, Midwestern farmers are increasingly approaching bankruptcy territory. But a new analysis says the right land management strategy could help some farms stay afloat.

Economists say rising input costs for fertilizer — made worse by the war with Iran, global trade disputes and depressed grain prices — are weighing down profits.

Samuel Porter, an agricultural economist who is researching the topic for the Minnesota Farmers Union, said conventional wisdom holds that farms should expand acreage and increase yields to boost profits. But the information he is gathering suggests that is not always the case.

“If you're pouring all of your money in extending and you have really big costs for expensive equipment in order to meet these growing operations, that might actually drive profitability down,” Porter said.

Porter said increasing profits by scaling up is still possible, but it mostly comes down to farmers staying in tune with what their land needs. That includes monitoring soil health, choosing the right equipment and avoiding excess fertilizer use.

When it comes to yields, Porter said there is a 45% revenue gap between the highest- and lowest-performing farms. The Midwest saw a 70% increase in farm bankruptcies last year.

Porter stressed that a smart yields strategy does not guarantee success, with weather and other variables still playing a role. He also acknowledged that long-term planning might not help a farmer in crisis right now, but it could protect a producer’s bottom line during the next crisis.

“If you are gong to continue farming, what do you have to be more strategic about?” Porter said. “What can you learn from the more profitable farms in order to be more resilient?”

Porter’s latest analysis also indicates that strong marketing is associated with higher profits. To keep family farms from going bankrupt, he said working with an adviser to pitch crops to many different customers and markets, along with the right timing, could help farmers get better prices.

Source: Public News Service