Posted June 17th, 2024 | By Allyson Bise

With rice planted and the growing season underway, it’s an opportune moment for farmers to examine their overall business approaches in pursuit of a profitable year. Given that economic indicators point towards a normalization in the agricultural industry, this assessment becomes even more important as the era of record-breaking farm incomes appears to be ending. Having access to capital can help growers manage cash flow needs, while crops grow. My husband’s family has been growing rice in Poinsett County, AR for over 40 years, so working for Nutrien Ag Solutions has been a way for me to bring my personal experience to my professional life, helping farmers like my husband make the best decisions to come out ahead at harvest. Here are a few ways having access to capital can improve your bottom line and prepare you for the inevitable surprises leading up to harvest.

1. Offset unexpected expenses

Once seeds are in the ground and plants are growing, rice farmers need to stay ahead of anything that may negatively impact the health and vitality of their crop. For many of us, the biggest thing to watch is the weather and how that can impact your profitability.

Dillon Cox is with Loveland Products, Inc., the proprietary products company for Nutrien Ag Solutions. His family has been growing rice in the Randolph County, AR area for the last 30 years, so he knows what it takes to have a successful rice crop. He helps Nutrien’s customers set themselves up for the best possible season, and he knows that takes a little proactive planning and flexibility.

“Once you plant rice, you know you have to flood it. Rice takes a lot of water,” Dillon says. “You also know you will need to put nitrogen on it and you have to pay for the fuel to keep the fields flooded, otherwise you’ll have a whole host of other issues.”

Even with good rainfall, weather conditions can affect how much water is needed and how long you need to run your pumps, since rice requires consistent watering. Anticipating and preparing for dry conditions can alleviate financial hardships. Using financing as part of your overall financial plan can provide the wiggle room growers may need mid-season.

2. Keep cash on-hand

With that eye on the weather, we also have to contend with bugs and pests that might wreak havoc on our rice crop. One way to keep yourself afloat during the season is to finance the inputs needed to keep your crop healthy - things like sprays or fertilizers. With Nutrien Financial, you can get a line of credit to pay for those and payment due dates are flexible enough to work with your crop cycle. That way, you keep cash on-hand for emergencies.

Emergencies aren’t the only reason to conserve cash. If an opportunity comes up to expand your operation or purchase a new piece of equipment at a good price, it’s nice to have the cash available to be able to act quickly. To that end, here’s a story of one young Arkansas farmer in my area who was able to grow his operation by leveraging smart capital management strategies, so he had funds ready when he needed it the most.

3. Stay ahead of market volatility

Crop markets are constantly shifting. One year your crop may be worth a lot more than it is the next year. And the cost of getting that crop in the ground fluctuates as well. One big shift in the market for rice this year has been the limited availability of seed for some desirable varieties. That market fluctuation creates a ripple effect for the entire season because farmers have to shift what they’re growing if they can’t get enough seed of the variety they want.

 “A grower may not have been able to secure enough seed of the particular variety he/she wanted to plant on all available acres,” Dillon says.  “Rice varieties differ in their tolerance to herbicide technologies both in season as well as from carryover effects the following season.  This places restrictions on where growers can plant rice behind rice, especially when certain herbicide tolerant varieties are in short supply as we have seen in 2024.”

Interest rates are another factor that could greatly impact a grower’s bottom line, and we’ve seen rates increase over the past few years, taking up a bigger portion of an operation’s budget. That fluctuation can create uncertainty around the cost of borrowing money. Nutrien Financial has consistent interest rates that are fixed for the season, making it easier to stick to your budget.

Using financing as part of your capital management strategy can help you stay ahead of the curve when the market shifts, which it inevitably will.

4. Managing undulating costs

While our fixed operating expenses are those things we know we have to pay for each year, the cost of those expenses varies from year to year. One of the biggest expenses rice growers have is running pumps to irrigate the crop. Like many of our expenses, fuel and electric prices have gone up over the years. With inevitable increases in necessary expenses, effective capital management strategies may provide a solution to maintain financial equilibrium.

“If we can get a low interest rate for inputs versus worrying about the 10 percent or higher rate from the banks, that’s a really big deal for a grower,” Dillon says. “Financing can help alleviate some of the in-season pressure about running out of money.”

If you’re interested in exploring financing options to provide relief from economic pressures during the growing season, then check out Nutrien Financial here where you can quickly apply online. You can also read more about how weather is tied to revenue and how to stay cash flow positive.

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Brent Smith of Nutrien Ag Solutions sits down to discuss his passion for FFA