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The Capital Factor in Farm Business Management
This article was printed in the March/April 2010 issue of the Organic Broadcaster, published by the Midwest Organic and Sustainable Education Service.
For most farm businesses, capital is not an infinite resource. Each farm business has a specified amount of capital and a unique blend of capital allocation, based upon enterprise type, operation size, investing and spending habits, profit objectives, and future plans. In this article we will explore the second ‘C’ of the ‘Five C’s of Credit’- capital. Capital is an important area to assess based upon the farm business’ past financial performance and its future plans. While agricultural lenders typically analyze numerous ratios and indicators related to capital, based upon the nature of the farming operation and the credit request at hand, this discussion will focus on capital decisions as it relates to farm business management from a practical, profit-driven perspective.
Capital asset management is a challenging job for the successful farm business manager. It can be a very rewarding job, as well-planned decisions propel greater operational efficiencies and increased profitability for the farm business. For the manager-owner, it can provide a fulfilling career and a potential farm business legacy for future generations to enjoy.
Amber Bennett is Vice President- Farm & Home at Badgerland Financial, serving farmers and rural communities in 33 counties of southern Wisconsin. Amber works with a team of lenders who specialize in serving the unique, financial needs of full-time farmers, part-time farmers, and rural homeowners. She grew up on a dairy and livestock farm in southwestern Wisconsin and has 18 years of agricultural lending experience. She received a Bachelor of Science degree in agricultural economics from U.W. Platteville and an MBA from U.W. Whitewater. For more information, check out www.badgerlandfinancial.com.Return to TOP