Overwhelmed by your Farm Finances? Books That Help

By Chris Knight

Chris Knight of Clear Creek Farms produces certified organic Angus beef on grass. He’s passionate about knowing what his numbers look like as well as managing pasture. Chris has also taught FarmStart’s Farm Viability Course. Check out the books he found most helpful in getting his head around managing his farm finances.

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Farmers, and especially young ones, who are balancing fieldwork, families and finances often feel overwhelmed. After a long day outside and then a few precious minutes with your children at dinner, the last thing you want to look at are invoices, crop and livestock records. Worse yet, spreadsheets with all this data in tiny cells that make your eyes squint at 10 o’clock at night can be nauseating. And yet, as cold as it may sound, it’s exactly this financial information, which determines whether you succeed or fail in the business of farming. Raising animals and crops is a relatively easy task. Pricing items properly, controlling costs, keeping up on bookkeeping and accounting tasks are often where we as farmers struggle. I knew this from my own experience. However, I also knew excellent farmers with a very healthy bottom line who could tell you exactly to the nickel their cost of production on crops and livestock. Somehow, I had to get to that level of confidence with accounting. I went looking for books and these are the best that I have found so far:

Financial Statements by Thomas R. Ittelson
Financial Statements - 2009 - by Thomas R. Ittelson, Career Press

Financial Statements by Thomas R. Ittelson, 2008, Career Press. 

This is a non-farming specific accounting book and it is excellent. The “Yah butters” will say farming is different – no it isn’t. It’s a business. The book’s goal is to make the owners money to live, pay off a mortgage, keep accounts up to date and deliver products to customers. This book is very easy to read and reinforces the simple messages of accounting over and over again.

The first half of the book outlines key financial statements a company should have at its disposal such as the Income Statement and Balance Sheet. It explains all the categories that go into the making of these statements. There are no massive pages of small print, only clear and concise definitions and examples. The end of the first part has an excellent series of financial statements that lets you track transactions and their influence on different key statements. You can actually see the impact as money flows through and from a business. The second half of the book deals with real life and applicable transactions of a hypothetical company. Many of these transactions will be similar to agricultural decisions made by farmers.

The last sections of the book deal with using the information you learned how to organize in the first half of the book. There are sections on ratios, using journals and ledgers and an important section on “Cooking the books”. Following this, the author does an excellent job of outlining how to use financial statements to make decisions regarding expanding your business.

All told, this is an excellent starting point if you want the basics or if you think you know the basics and want to refresh your memory. I would recommend this book to anyone in agriculture.

Fearless Farm Finances – Midwest Organic & Sustainable Education Service (MOSES)

Fearless Farm Finances: Farm Financial Management Demystified by MOSES, 2012.

For those of you who want a book written by farmers for farmers, this is it. Written by a team of well-respected organic and sustainable farmers from the Midwestern United States, there is lots of great information in these pages. Analogies, personal stories and reflection abound in each chapter. The topics covered are very similar to the above reviewed Financial Statements. However, Fearless Farm Finances (FFF) is more about the story and analogy whereas Financial Statements will serve you in the future as a quick reference manual. Both books belong on your shelf. FFF even has a chapter titled “Should I buy that tractor” so you can see that this book is very specific to those in agriculture.

Additional chapters that may be of assistance to those with ambitions in agriculture are also provided. They include chapters on marketing, pricing and dealing with lenders. All are excellent and again, as is the general theme, include real world analogy and commentary.

I own both of these books. Both are dog-eared and have lots of sticky notes attached to the pages. That has always been a sign of a good book for me. Get yourself one or both of these great resources; you will begin to see your business in a whole new light. If you take the messages the authors provide to heart, that lump in your throat around tax season will start to fade away.
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