By Diane Turner
While working on this article about managing farm finances, I thought, “How can I write this when I am terrible at a budget myself?” Then I thought, “Everyone does things a little bit different.” We all have different methods to understanding our money madness, and what didn’t work for me might work for someone else.
When I changed jobs a few years ago, it was hard for me to adjust from being paid every Friday to only twice a month. I struggled for months with my budget (Let’s be honest, maybe I still do). I brainstormed different techniques and tried giving myself only half of my check and putting the rest aside. When that didn’t work, I put money in my savings accounts so I would get a penalty if I withdrew money too often. As you can imagine, that method failed as well. After getting married, I realized I needed to step it up and finally started using a different system.
For our family, things are a little bit easier. My husband and I have full-time jobs that bring in regular paychecks, and my husband farms on the side. Monthly bills are paid with income from our full-time jobs. For insurance and extra items, we use the envelope system, putting a little bit away each week so that, when large bills come, the sting isn’t as bad.
Many families have one stream of income to pay for monthly expenses. Others rely on income when crops are sold. Some larger families may find it easier for the primary-care provider to stay home and save on the cost of child care in the early years, and to lend help in the field or in the shop.
Not every year is a good year for farming, but there are options when things are not so great. Recently, I had the chance to talk with Jarrod Bennett, sales representative and owner of Western Kentucky Crop Insurance, about the products he offers farmers when conditions are unfavorable for crops.
Most of the policies Bennett offers are considered “federally subsidized” while 5 percent of the policies are private. When a claim is placed, insurance is tailored to make up for the annual shortfalls in cash flow and revenue. The policy itself acts as liability protection for the purchaser.
Many lending sources require farmers to have some type of crop insurance before they are approved for lines of credit. Bennett said the most recent Farm Bill is a source of concern for the agricultural community, considering only 20 percent of it is focused on insurance and FSA programs.
“We have to protect America’s food source, so there was a great deal of lobbying in Washington, D.C., to pass a Farm Bill that gave reassurance to the community,” he said.
Lending institutions provide the light at the end of the tunnel for many farmers. Brandon Oldham, branch manager of United Southern Bank, spoke about the options he can offer customers. Lines of credit provide cash flow for purchasing equipment, seed or others products vital to the production and harvesting of crops.
Oldham said the bank works with its customers in ways that are convenient for them, such as arranging annual or semi-annual payments with only the interest being due each month.
He also talked about how the bank is competitive with its interest rates and that he is not afraid to send customers elsewhere if they can get them better terms.
“My no. 1 concern is the customer,” Oldham said, “and making sure that their needs are met. If I can’t do that here, I’ll refer them to someone who can help.”
With the assistance of lending institutions, such as United Southern Bank and Farm Credit Services, many small farmers have the financially stability they need.
Luckily, the government also believes in setting aside funds for our agricultural communities through programs at local FSA offices and supporting crop insurance agencies.
Much of this information is not new, but it helps the rest of us understand the struggles our ag families face — maybe we need to take a lesson on budgeting from our farmer friends.
By Diane Turner