The following article is a recap of “Staying Ahead of the Curve, “ a presentation in our Roots to Results Webinar Series. The full webinar recording can be viewed here.
Farming has always involved risk, but today the risks feel sharper. Volatile markets, rising input costs, unpredictable weather and tighter margins are forcing many farms to think differently about how they make decisions.
In our latest Roots to Results webinar, Evan Shout, president and co-founder of Maverick Ag, challenged the idea that these pressures are completely out of our hands. While farmers can’t control markets or weather, they can control how they prepare their business to respond. This preparation starts with understanding the right numbers, not all the numbers.
Strong land equity has helped many farms stay stable, but equity alone doesn’t create flexibility. Cash flow, debt structure, cost awareness and timing increasingly determine whether a farm can hold grain, invest wisely or weather a tough year without being forced into making hard decisions.
Know the Three Numbers That Really Matter
Not every ratio deserves your attention, but three do: working capital, debt service ratio and debt-to-equity. These are the numbers lenders watch and they shape your day-to-day flexibility. Strong working capital gives you selling power, a healthy debt service ratio keeps the bank on your side and debt-to-equity tells you how much cushion you really have.
Implementation
Ask your accountant for accrual financial statements and calculate these ratios annually. Track trends, not just single-year results.
Calculate Your True Cost of Production
Cost of production isn’t just seed and fertilizer. It also includes machinery depreciation, family living draws and even the opportunity cost of owning land. When those costs are hidden, pricing decisions become emotional instead of strategic.
Implementation
Use conservative, 10-year average yields and today’s prices. Include personal drawings and realistic equipment depreciation to find your real break-even.
Use Break-Even Numbers to Guide Marketing
Once you know your break-even, marketing becomes clearer. Instead of hoping for a rally, you can decide when selling at a small loss protects the whole farm, or when a crop is carrying the operation.
Implementation
Pair break-even prices with a simple return-on-investment target. Share these numbers with whoever handles marketing, so decisions support the entire business.
Treat Lean Management as Risk Management
In tighter years, controlling costs matters more than chasing yield. Lean management isn’t about cutting blindly; it’s about finding small efficiencies that reduce pressure on cash flow and debt.
Implementation
Review expenses line by line. Ask what can be delayed, downsized or done differently this year without hurting long-term productivity.
Benchmark, But Know the Story Behind the Numbers
Comparing your farm to others can reveal blind spots, especially in machinery, labour and debt per acre. However, numbers only make sense with context.
Implementation
Benchmark against similar farms and against your own five-year history. Use percentages of revenue, not just dollars per acre, to spot trends.
