Over the last few years, it has become increasingly harder to overcome cash flow problems.
“I think back to probably two years ago, when we were in the Farm Bureau Building. I made a comment, we were talking about hard cash flows at that point, and all you have to do is work harder. And Grant [Strom] said, I don’t think that’s right. And you were right.”
Thad Tharp, Land O’Lakes Senior Loan Officer, was part of the FS Ag Roundtables back in September. He shares that over the past few years, he has had to change his definition of “working harder” to be successful.
“What I mean today is work harder equals work differently. You can’t produce yourself out of a cash flow problem because of the costs associated with it.”
To be successful today, many young farmers coming into the agriculture industry have had to diversify their income streams.
“Meaning, when somebody comes in to borrow money, and they’re under the age of 30, let’s throw a dart and say the most important line item on that cash flow is non-farm income,” says Tharp. “Generally speaking, does their spouse have an income? Because of insurance costs, what’s their ability to be able to maintain those external costs that all take money?”
According to the American Farm Bureau, in 2023, 96 percent of farm households earned money from off-farm sources.
