As a farmer, you need to understand your farm finances in your operation so that you can mitigate risk.
There are three main things that you should be aware of:
- Profitability:The first thing to understand is whether your farm business is profitable. You need to be able to make an operational profit, or you cannot farm. It’s as simple as that.2. Assets: Number two is that you need to protect your assets.
3. Role as a farmer: Number three is that you need to clarify your job as a farmer. We sometimes confuse what we like to do, with our role as a farmer. However, “like” doesn’t feed your family.
There’s a rural myth that by working hard, you’re making money. However, it’s essential to take a step back from the hard work, and really try and understand your numbers. Think about it this way – would you ever accept the terms of conditions of employment, in which you work all year and then pay your employer money to have that job?
WatchReg Shandro introduces the financial risk pillar of the ‘5 Pillars of Risk Management’ and tell you what to look out for.
This workshop was funded in part by the Agriculture & Food Council of Alberta