AND THEN THERE WAS PROFIT | FARMING YOUR MONEY
And Then There Was Profit Holy smokes, the 2021 growing season is looking to be a great one for western Canadian farmers. Seemingly out of nowhere, grain prices for new crop have taken off.
Paul Kuntz Paul Kuntz is the owner of Wheatland Financial. He offers financial consulting and debt broker services. Kuntz is also an advisor with Global Ag Risk Solutions. He can be reached through wheatlandfinancial.ca.
We have all experienced old crop price runs. Every now and then we see a commodity price rally because supply is low. It happens in small acreage crops like yellow mustard and canary seed quite often. It normally does not happen in the large acre crops because the users have a reasonably good idea what is out there for crop and they act accordingly. A new crop rally is a whole different ball game. Typically, a fresh harvest is a chance for merchants to steal some grain from farmers forced to sell. Paying a farmer a premium for their crop when it is the most convenient time to deliver, is rare. Managing the financial aspect of your farm when grain prices are high is not really a problem, but it does have its challenges. Also, it might create opportunities to make changes that will pay dividends for years to come. The first financial management tip is do not spend it before you have it. As farmers, we already risk a lot of dollars in the spring in hope of a crop. Do not count on this price windfall to expand long-term debt or any decision that will increase annual cash outflow. We do not have this crop in the bin yet, and we cannot expect these prices over the long-term. 33
