Is 2023 the Year to Spend or Save?

One of the most difficult decisions farmers, like all business owners, face each new year is: how much should I invest in my business over the next twelve months? Is this a year to be cautious or even super cautious, or is this a year when investing a little more will help make up valuable ground? Investing in your business at the right time can mean achieving those life-altering, big-win years; knowing when to save is critical when your primary goal is just to survive. What does 2023 look like for you?

Here’s what I see ahead:

Fertility costs look to remain high with some softening compared to 2022. Fuel costs will continue to be high. Labour costs will continue to climb. With this cost outlook, increasing farm business profitability will be challenging but critical.

I have a close friend who farms in south-central Saskatchewan. He’s the type of guy who prefers to avoid risk: he typically plays the certain bets and prioritizes building a legacy he can pass on to his kids. He’s also committed to being a good steward of the land. For many years, he worked his way through an intensive cost-benefit process each winter to decide how much certified versus saved seed he’d plant the next year. About six years ago, he started realizing the trends he was seeing – that certified seed fields not only out-performed but out-profited his saved seed fields – weren’t ‘one-offs’ or chance. Using saved seed for a single year showed an obvious drop in returns; using it for two or more years produced a considerable drop in performance.