Care needed for farmers' 2025 cash flow

With harvests 2021 and 2022 providing such strong returns in the arable sector, followed by strengthening returns in livestock and intensive sectors, cash requirement is back on the agenda.

Harvest 2023 saw very variable gross margins across all corn and horn sectors. Now combines are starting to move, it is important to assess what the impact of poor weather during the 2024 season will have.

It is very well reported that harvest 2024 will leave much to be desired. This isn’t necessarily a problem now but might be one in the future. Cash flow strength in all sectors can provide the goods to purchase and sell at the right times. This is a key driver of overall profitability.

We must remember that:

The farm profit and loss account is a snapshot of the activities from one date to another, adjusted by a stocktaking valuation. i.e. “The Journey”.

The balance sheet or “net worth” change at the end of the year can be analysed to ensure that net worth is not being eroded by losses but improved by profitability, i.e. “The Destination”.

Cash flow is the way that the business trades income and expenditure to complete The Journey, to arrive at The Destination. The Cash is “The Fuel”.

I expect that for some businesses, especially those with current short or long-term borrowing facilities, the need to assess cash flow is greater than ever. The bank will support you, but only with good quality information and credible figures. Running low on cash in your business is like gambling to get to the next services on the motorway with 20 miles in the tank!

To discuss production and monitoring of budgets and cashflows please contact your local Brown&Co Agri-Business Consultancy team, by clicking below.

Contact your local office