Farming has come a long way in the last century. So has farm accounting.
The developments in farm technology are easy to spot: better tractors and equipment, more efficient methods, and higher yields. Growing crops and raising livestock is a lot easier today than ever.
Improvements in farm accounting may not be as easy to recognize, however. After all, numbers haven’t changed and math is still the same.
But there are some interesting developments in farm accounting that you should know about if you run any kind of agricultural or farm operation.
It has been said that an accountant can’t teach a farmer how to farm, but a good one can certainly make a farmer’s life better. Read on to learn more about some trends and predictions about the future of farming and ag accounting.
Top Agriculture Trends For 2023
You can find plenty of sites talking about top agriculture trends, but since we’re focused on how these relate to the future of farm accounting here are 3 of the big things we see coming down the road.
1. Digital everything
For as long as anyone can remember, keeping track of everything on the farm happened with good ol’ reliable pencil and paper. Many old-timers still prefer to do it that way. (After all, “if it ain’t broke…”)
But thanks to the conveniences of modern technology–you’re carrying a computer in your pocket more powerful than the spacecraft that took us to the moon–managing your farm’s information digitally is incredibly easy.
It’s already not uncommon to see a farmer in the field with an iPad next to outfitted with wifi and GPS. (Look for that tractor to be a fully autonomous John Deere soon, though.) And companies like Farmbrite, BushelFarm, and Croptracker are among some of the top groups going even further to develop software that farmers can use to streamline their operations, regardless of size.
2. More information, less data
The information farmers have typically collected has been used to measure success or determine what needs to be done differently next season. In the future, there will be much more of an emphasis on information over raw data.
Because many farms now find themselves operating as part of a network of suppliers, vendors, marketers, and retailers there is a need for all of these parties to have better and better information about the farm products being produced.
As farmers can analyze data better and deliver their findings clearly to everyone involved, each player can make better decisions, leading to greater efficiency and success.
3. Sustainable practices
As we’ve learned more about the value of smart soil management, farmers and ranchers have begun focusing on practices that maximize the potential of their land rather than over-grazing and over-plowing until it is no longer useful for anything.
“Regenerative agriculture” is a phrase that we can expect to hear more of in the future. It involves finding ways to return nutrients to the ground through recycling farm waste, large-scale composting, biodiversity, and no-till methods. The goal is better yield through increased efficiency.
All 3 of these relate to farm accounting in that they affect how farmers and ranchers process financial data and make investment decisions. In order to do that effectively in the years ahead, they’re going to need the help of a good accountant.
The Future of Farm Accounting
Farming is unlike any other business in the world. Your office is measured in acres, and your mobile workspace comes with a lot of horsepower and various attachments.
Your day starts early, ends late, and involves doing the work of multiple people all by yourself.
One thing people in the agriculture industry shouldn’t have to do alone is struggle through managing their finances. That’s where a good farm accountant can become an essential part of your operation.
Your farm or ranch involves several unique revenue streams, assets, liabilities, and expenses. Staying on top of the numbers involved with each of those on your own while making sure your harvest or herd stays on track is overwhelming.
As farming turns more digital with greater value on turning data into useful information, having an accountant focus on ensuring your money is managed well can mean the difference between farm success and farm failure.
The future of farm accounting that we see based on our experience and conversations with our farm clients looks like this:
1. Seamlessly Remote
The COVID-19 pandemic made “Zoom” a household word. Video conferencing used to be a clunky communication tool, but in the past couple of years, it has become a valuable tool for business…even agribusiness.
Imagine not having to leave your farm or ranch to make a trip into town to sit across from the desk of your CPA. The travel time, fuel costs, and disruption to your work all disappear when you’re able to meet virtually.
Most of the time, a meeting isn’t even necessary. If your accounting data is accessible online, all your CPA has to do is log in to be able to oversee your finances remotely.
These are tools we’ve been using with great success over the past several years here at CRS CPAs, and we envision it only getting easier and better.
2. Data-driven Decisions
Cash flow management is a critical part of running a successful business. Farming is no different.
As data becomes more and more accessible, the information it provides can be used by farm accountants to help farmers and ranchers make smarter decisions in order to keep the cash flowing efficiently.
The possibilities are endless, and they’re as unique as your farm is. For example, your farm accountant could help you know if it’s the right time to:
- Restructure your company
- Take on additional employees
- Pick a more profitable crop or herd to produce
- Set up an ongoing CSA
- Offer seasonal specialty items
- Rent some of your land
- Sell or purchase equipment
- Get into agritourism (wedding planners love farms and barns these days)
3. Maximizing Opportunities
As agriculture shifts to more sustainable practices, government dollars will continue to flow to participating farmers and ranchers in the form of grants. By taking some simple steps in most cases, you can take advantage of this additional revenue. The farm accountant who stays on top of such trends will be perfectly positioned to help you maximize these opportunities.
Farm subsidies are constantly changing as our government determines what is in short supply or overproduced.
One of the biggest things that will have an impact on farming in the future is the development of AI technologies. Forbes recently published an article titled, “How AI Is Cropping Up In the Agriculture Industry” which is worth reading. While farm accountants aren’t going to be involved in developing ag-AI, they will be able to help you know how it can improve your farm finances over time.
Forbes points out that (as of March 2023) there are over 200 AI-based agricultural startup companies in the U.S. Being able to take advantage of computing power that can streamline millions of data points will be a game-changer for many farmers in the years to come. To fully utilize such technology, they say agribusiness owners need to be able to:
- Use multiple types of data (video, sensors, etc.)
- Track lots of data over time (let AI monitor how your plants are growing while you do other things)
- Utilize constant monitoring and nonstop learning (small improvements here and there can result in significant yields and profits in the end)
Accountants Specializing in Farming
We are grateful to show up as one of the top results when you search online for “accountants specializing in farming.” With over 40 years of experience and 7 locations across West Tennessee, we are perfectly positioned to understand the needs of the farming community.
We’d love the opportunity to become your farm CPA too. Our team of accounting and business professionals (who also happen to know a thing or two about farm operations) have what it takes to help make your farm a success for generations to come. Schedule a call today to learn more so you’re ready no matter what the future holds!
