Source: Purdue University
Farmers who want to make money in today's unpredictable economy would do well to assume a corporate mindset and think like a chief financial officer, a Purdue University agricultural economist says.
With many farm businesses now multimillion-dollar operations and the operating risk in agriculture increasing, producers should focus more time on the financial side of their business, said Mike Boehlje. CFOs think about profitability, capital structure and debt service, size and growth, risk and financial documentation, and creating shareholder value, he said.
CFO-type thinking will help farmers navigate swings in commodity prices and production costs. Although price volatility is inherent to farming, price fluctuations are greater today than they were in the past.