Farmers are entrepreneurs.  Yet many of us came into the business without specifically thinking about starting a business and being an entrepreneur.  The process has its challenges.  In the book The E Myth Revisited, the author, Michael E. Gerber, points out that a very large percentage of new business fail.  According to his stats, 96% of all new businesses fail in the first 10 years.  Here our CEO and entrepreneur Darren Frye talks with KRVN's Ken Rahjes about some of the challenges of being a farmer-business owner.  

July 28 2009 Business Book for Entrepreneurs - Frye.mp3 (2.69 mb)

There are financial rewards to alternative farming -- like organic farming, or growing specialty crops.  But getting a start in the business requires financial forethought.  For instance, if you're going to farm organically, it's a good idea to do that on land you own, rather than land you rent, because of the control you have over that land.  The transition time to organic farming means a three year period where yields would be lower than in traditional farming and you're not yet allowed to market the crop as organic.  So, CEO Darren Frye says you need to plan financially to have enough working capital to take you through those years.  He talks here with KRVN's Ken Rahjes.

July 21 2009 Considerations for Alternative Ag - Frye.mp3 (3.01 mb)

Most farmers love their new iron.  It's good to know, though, how that impacts long term farm equity and working capital.  CEO Darren Frye talks with KRVN's Ken Rahjes about the choices, and how to measure equipment costs if the goal is profitability.

July 16 2009 Equipment Cost Analysis - Frye.mp3 (3.54 mb)

According to the Association of Equipment Manufacturers' monthly "Flash Report", the sales of all tractors in the U.S. for June 2009 were down 18.8% compared to the same month last year.  Bucking the trend, combine sales were up 20.2% for the month.  Sales of combines for the year 2009 to date showed an increase of 29.3% over the same period in 2008.

We're finding through many financial analyses that one of the places where farmers could improve profitability and increase net worth is in the equipment category.  Focusing on combines specifically, a lot of operators will trade combines often.  They might feel differently if they analyzed that financial decision.

Water Street Solutions' Ag Finance Specialist Joe Delheimer put the concept to the test.  Focusing on just one piece of equipment, over the 40-year career of a farm operator, the savings is staggering.  If a farmer decided to keep a combine 7 years instead of trading it at 5 years and did that every 7 year cycle, he would have an additional $500,000 in farm equity after 40 years -- from that decision alone.

When Water Street Solutions conducts financial analyses, we ask for an inventory of all of the farm equipment in the operation.  This includes the value of leased equipment and things like utility vehicles and farm trucks.  We use market value of each piece of machinery and divide the total by the number of acres farmed.  A healthy number is $250 of machinery per acre.

It's a stressful time right now, if we've been neglecting our risk management work.  CEO Darren Frye talks with KRVN's Ken Rahjes about developing a strategy for what we can do now, since we've seen grain prices drop significantly in the past week.  Frye advises that growers have a good understanding of their break-evens, and be prepared for upside potential that remains through the rest of this growing season.  

July 7 2009 What To Do Now - Frye.mp3 (3.94 mb)