Much of the work we do is helping farmers decide how to restructure their debt and whether to file bankruptcy—and if they do file, representing them in navigating their case.

We are also committed to assisting farmers and small business owners in examining their operations so that perhaps they won’t reach the point of needing to restructure their debt or file bankruptcy. This is our enterprise analysis service—which, as indicated, is for both farms and businesses, although the vast majority of our clients are farmers.

The goal of farm enterprise analysis is to help the producer figure out which flows, or “enterprises,” of their business are or are not pulling their financial weight. Common enterprises on one farm might include two or more of the following:

• Crops
• Dairy
• Livestock
• Seed sales
• Trucking
• Retail
• Agritourism
• Many other enterprises

It is also possible to use enterprise analysis to determine whether to continue renting certain farmland, or whether it might be wiser to give up a lease further away for one much closer that might cost more in rent but save on fuel, hauling, and time. For growers in Iowa¹, summer is a prime time to have analysis done for purposes of renting (as the September 1 deadline looms to inform landlords or tenants of non-renewal in March 2027), and also to adequately prepare for input purchasing decisions later in the fall.

Right now most of the analyses we perform are for row-crop-heavy farms, but the process is useful for any farm type.

How the analysis helps

It’s important to assess each individual enterprise to see if it can support itself, but also for the impact it’s having on income for the entire farm. These individual assessments usually provide surprising insights to even the most knowledgeable farmer.

Recently we worked with a client to perform an analysis on each of his farm’s six enterprise flows, to help determine which pieces of equipment to keep or sell while writing his Chapter 12 plan of reorganization. We determined how much each piece was used in each enterprise—which included combining, planting, spreading manure, grain storage, spraying, and custom cattle finishing—to assign a percentage of each machine’s use to the enterprise(s) using the equipment. Then we divided the cost of the piece among them accordingly and calculated the income from each enterprise against that and its other costs.

In the end, we showed many of these enterprises could not support all the equipment required to conduct that work. This is the type of process that helps a farmer decide if they should continue with a specific enterprise and, if they do, if they really need the equipment.

Another good example is a farmer raising corn and soybeans, with some of the corn being used as feed for their livestock. The key question here is: What is the effective price per bushel that the farmer is receiving for what is being fed to livestock, and how does that compare to the market price it would fetch at an elevator? If the price received by walking the grain off the farm is less than the elevator payment, the farmer should ask, “Why am I continuing to feed livestock?”

A secondary line of questioning would be: Is this a short-term anomaly or a long-term issue? If it is long-term, can the enterprise be turned to a profit? If not, what are the financial ramifications of ceasing the livestock operation? Would the farming operation be more profitable by either selling the crops at market price or divesting the farm of that livestock?

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Honesty in outside advice

It is not uncommon for farmers we work with to realize during an enterprise analysis that the numbers they’ve been working with aren’t precisely accurate. Good longtime farmers develop gut feelings about their work and the supplies they need—but when margins are as tight as they are right now, every opportunity to trim costs should be considered.

We’ve heard everything from, “So I’m really not using this equipment enough to justify having it?” to, “I didn’t realize my yield estimate was that far off my actual average.” Producers confident in their cost versus profitability have been surprised, for instance, to see their actual piglets per sow per year in black-and-white, or more dry days for dairy cows between weaning and estrus than they had been figuring.

This is where an outside perspective is so valuable. Farming is a business, but it’s also a calling with much emotion tied up in it—and as such, the people who do it sometimes justify unnecessary expense as a given. We provide an impartial, honest point of view that works in facts and data. It’s good to love your work, but to avoid losing money or the farm, it’s great to know your assets, liabilities, and the profitability of each enterprise on the farm.

If your overall income far exceeds your costs and you can afford to keep equipment you’re not adequately using or extra livestock that costs more to feed and medicate than you earn in marketing them, you are unlikely to need our assistance. (However, even in this case, not keeping your eye on costs and profitability could lead to declining net worth and unwise borrowing later on, that could eventually result in financial distress.)

If you see reduced return on investment, experience mounting debt, or otherwise feel you could better streamline your farm’s expenses, Ag & Business Legal Strategies can help you pinpoint where to make changes. Call us to find out where you’re really headed—and if it’s a good idea to pivot and change course.

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At Ag & Business Legal Strategies, we want our clients to be honest with themselves and have a solid business plan. Our team will help you create and execute that business plan, and, if necessary, assist you with the legal, tax, and practical aspects of debt restructuring or bankruptcy.

Don’t wait for the problems to become insurmountable. Connect with someone you can trust today, not tomorrow, when it may be too late.

¹Lease termination deadline in Iowa is September 1. Other states’ deadlines are as follows: