Start the new season with confidence

A farmer who knows exactly how he or she stands financially makes a better start for the new season. With one foot in the 2017/18 season, business advisor Harm Jan Schipper of Accon avm offers a number of tips.

Although the profits of the 2016 harvest are good among seed and ware potato companies, there is a chance that companies with a lot of onions or carrots will achieve a significantly lower result than in 2015. To avoid losing sleep over the financial consequences, timely adjustment is a must.

1. Map out the financial results before the start of the season
   Accon avm advises its customers to have their household book in order before the new season starts. 'When the barn is still full, arable farmers try to sell their crops as best as possible. They are often surprised by the sudden arrival of spring. The old season has not yet been completed properly. A total overview of the disappointments and successes is still missing at that time, while you can make a better start if you prepare the financial balance 1 or 2 months before the closing date. This way you learn from the mistakes of the past season. Moreover, it says more than the current account status. This is even more true this year, because arable products bring positive and negative surprises.'
    
2. Provide sufficient buffer
   Grain prices were lower than expected. Although the physical yields of ware potatoes, seed potatoes and beets were disappointing, prices were good. In contrast, onion and carrot growers suffered the most in 2016. 'A good potato price can compensate for the disappointing price in onions or a large drop in payment rights.'
   
   Start by calculating the taxable result. 'What does that look like and what does that mean for the investments to be made for the closing balance and for the new harvest? It is essential to know exactly how the flag hangs. Can you pay it from your current account or do you have to postpone the investment? You may be able to lease instead of buying something all at once. If you have sold a lot of potatoes for a good price, you can consider speeding up the project.'
    
3. Make a liquidity forecast
   Red status takes a bite out of the budget
   List what needs to be done next season. 'Put that past the turn of the year', advises Schipper. 'The costs of cultivation are usually clear. Does something really need to be done in the machinery, in storage or are larger private expenses planned? Being in the red on the current account for a few months is possible, but being in the red for more than half a year is often not wise. Red status takes a bite out of the budget. The opportunities for entrepreneurs are in the cash flow that is based on the results of the last season. This is how you determine the ranking on the wish list for the new season. Calculating the payback period helps with this.'
    
4. Save on costs 
   In 2016, growers incurred more costs for crop protection, soil improvement and lease than in 2015. For example, crop protection turned out to be considerably more expensive, because a lot of disease control had to be done in the spring of 2016 due to the large amount of water. The good conditions in the autumn led more growers to hire contractors to improve the drainage of fields. Many companies have also invested in an improved leveling of the plots. Finally, lease prices were significantly higher than in 2015. 
   
   Schipper cannot yet say exactly how the costs will develop for the coming season. 'Energy seems to be rising, crop protection and extraneous labor depend on the weather and the maintenance of machines is also strongly linked to the ease with which growers can harvest and process. Rents are based on regional standards; these do not tend to decrease, but the largest increase has passed. Savings will be made on ground improvement in 2017, because this step has already been taken. On the other hand, fertilizers are attracting in price. It is calm on the interest rate market, but make sure that the overdraft on the current account is not too long.'
    
5. Reduce the tax burden 
   The government offers opportunities to adjust the tax burden more to your liking. 'A nice way to do this is the Energy Investment Allowance (EIA) on the insulation of existing buildings. In addition, massive use is made of the provision for asbestos roofs. It is wise to take advantage of such opportunities in better years. Certainly in the case of asbestos roofs that must be replaced before 2024.'
   
   'Find out whether you are going for a new roof on the old barn, building a new barn or just renovating a part. Use quotes from contractors to visualize what that will cost. Some of the costs that will come in the future can already be increased now, while no actual expenditure is incurred at the moment. In this way you can divide the costs over a period of three or four years.'

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