Getting ready for 2006
In place of the general economic commentary that’s long-appeared on the back page, Agriculture Business Review
will now offer an economic perspective geared to agriculture. We hope these insights add value to your business.
A Canadian farm finance perspective from the desk of BRIAN LITTLE
Head – Agriculture and Agribusiness
RBC Royal Bank
Over the coming weeks, Canadian
farmers and ranchers will put the
finishing touches on 2005. For
some, it was a year of progress and
success. For others, especially in
flood-damaged Manitoba, the year
was disappointing.
All producers have an opportunity
in front of them today. It’s the
opportunity to make a clear-eyed
business assessment of 2005, set
goals for 2006 and marshal the
resources needed to achieve them.
At RBC Royal Bank, many of the
country’s top producers are our
clients. We’ll be working closely
with them on reviewing 2005 and
planning for 2006.
The review and planning process
is geared to determine what worked,
what didn’t, why and why not.
What kind of yield or production
did the farm achieve? What were
the costs to make a dollar’s worth
of profit? How did the current year’s
results compare to past years?
Understanding and monitoring
costs is a big part of this deliberation.
Knowledge of costs can be
a key source of defensive strength
in the presence of risk. It can also
be a source of offensive strength
in the presence of opportunity.
Getting ready for 2006 is partly
about the agronomic preparations
– soil sampling, for example – that
every farm will make. It’s also about
scrutinizing past practices, seeing
what’s been most effective and
changing direction when results
have been disappointing.
Would capital improvements allow
for greater efficiency? Are repair bills
at a level that newer equipment
would make more sense? If so,
would lease or purchase be the
preferable option? Does the farm
have the working capital to amply
fund 2006 operations?
It’s also a time for considering how
the farm is meeting the family’s
financial and personal needs. I’m
a firm believer that if the family’s
not working, the farm’s not working.
Among RBC Royal Bank clients,
some of the best performers are
those who value the advice of their
neighbours, production advisor,
accountant, lawyer and banker.
They also seek out opportunities
for education and information.
Some clients in Atlantic Canada
have signed up for the prestigious
Executive Manager program at
Texas A&M University. The $10,000
cost can be justified, these
producers feel, by the prospect of
acquiring more information and
building a more successful business.
Whatever the farm sector, and
however 2005 turns out, a better
farm business is always possible.
Despite the inherent risks of
farming, the producer has the
power to make it happen.
All the best in 2006.
We can put you in touch with a world of expertise and financial services available through RBC Financial Group®.
Contact your nearest RBC Royal Bank branch for a referral.
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