Rabobank Advising Farmers to Limit and Cut Production Cost
Amid a third year of negative margins, farmers need to cut production costs to maintain access to capital, according to a new report by Rabobank. The report says the next several years will be tough because farmers typically can only survive a couple years of negative income and still access operating capital and loans. The Farming the Efficient Frontier report advises farmers to use cost-cutting strategies instead of focusing on crop volume to stay profitable. Researchers at Rabobank warn that given current input costs and market action, farmers need to avoid the mistake of planting too many acres. That’s because land is the “single largest expense” on most crop farm income statements. Over the next five years, the report estimates flat to lower prices for wheat, a three to eight percent increase in corn prices and consistent export growth for soybeans.
From the National Association of Farm Broadcasting news service.