Several weeks ago I attended the Doane Advisory Services Outlook Conference and guest speaker Moe Russell, President of Russell Consulting Group, posed the question, "How can farmers bulletproof their balance sheet?"

First, Russell tells producers to "work on working capital". Working capital, the difference between current assets and current liabilities, is the first shock absorber to get through financial bumps in the road. He recommends 50 per cent of annual expenses or 50 per cent of gross revenue, but said to be consistent with your measurement.

If farming more than 5,000 acres, working capital should even be greater than 50 per cent. Overall equities can be greater than 60 per cent, but he encourages producers to put their land in at about three-fourths of what they think it would sell for today.

Next, Russell said to refinance real estate or machinery to free up cash, and then have the discipline to not re-borrow operating debt. Act now to take advantage of the 50-year low interest rates in the US; don't wait until the margins disappear.

"I've said for the last 14 years that the biggest bottleneck for large growers is people managing - get the right people with the right skills at the right time doing the right thing," Russell said. "I changed that this winter - I think access to capital is going to be the biggest challenge. Because that gap is getting wider, operations are getting larger, regulations are getting tougher for lenders, access to capital is the biggest challenge."

Russell believes only about 2 per cent of US farmers use precision farming, but he thinks it's one of the greatest opportunities for improving yield and profitability. He noted a grower in southeast Iowa who is using precision farming has increased their yield by 7.1 bu/A over 10 years.

"7.1 bushels per acre per year over 10 years is 71 bushels per acre. The county average was 23 bushels per acre; the difference is 48 bushels per acre on 4,500 acres of corn at $6.50 a bushel is $1.4 million," Russell said. "That's real money. That buys farms. That puts kids through college."

In closing, Russell told attendees that there's more money to be made in production agriculture than any other industry.

On a separate note, the USDA reports out on Friday were bearish for crop prices - more so for soybeans and less for corn and wheat. Click here to learn more.

Have a great week!