Financial Tips for Women in Agriculture

From my observation, one of the major trends in agriculture is the increase of women in active ownership and management of farm and ranch businesses. The membership in youth organizations such as FFA is over 50 percent female, with 75 percent of those in leadership positions. At a recent conference, I was asked for any advice I might have for women in agriculture. While these points are pertinent for all managers, the following will be crucial as today’s female leaders continue to transition in and around the industry.

First, stay active and engaged in the farm business finances. Ask critical questions. For example, what are the debt levels and how do they impact overall risk? Historically, farm spouses have been equally responsible for debts incurred, but in some cases have not been active participants in the finances. Today’s female partners and owners must stay engaged. Of course, many larger businesses turn financials over to a chief financial officer or an accountant; however, that does not excuse active participation from all those financially obligated.

Assess the true profit of the business through accrual-adjusted accounting. And if the business did make a profit, pay taxes! That is, ownership mentality often evolves into minimizing taxes instead of managing taxes. This can lead to large amounts of debt, which stresses future cash flow.

Next, maintain working capital. As a crucial backup to cash flow and profits, working capital is a priority of successful managers. Again, this requires working knowledge of financials, much like one may monitor blood pressure or cholesterol.

Another tip for emerging female owners and managers is to make outside investments. Specifically, dedicate 5 to 10 percent of farm profits to off-farm investments. Remember, the goal is to secure 50 percent of one’s retirement income from investments and Social Security. This is somewhat of a change as historically, land and farm assets were the only investments made. In the words of the old adage, “Don’t put all your eggs in one basket.”

Lastly, female owners and managers need to stay updated and educated. For example, enroll in a financial literacy course, or a young farmer and rancher program. Farm Credit as well as other organizations like banks and agribusinesses frequently sponsor short educational sessions for those seeking financial stability.

In summary, the demographics of agriculture will continue to change. Today’s emerging female leaders bring new perspectives, energy and a renewed passion to the industry. Yet, regardless of gender, today’s successful managers and owners must be proactive in managing risk, information and education.