Understanding the Impact of Inflation on Your Financial Health

Explore the effects of inflation on your finances through insights on inflation rates, Federal Funds Rate, the Federal Reserve's outlook, crop production costs, interest rates, crop price projections, milk prices, dairy exports, and consumption changes. Learn strategies to manage margins effectively to safeguard your financial stability amidst economic fluctuations.

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• Inflation impact
• Financial health
• Economic trends
• Risk management
• Financial stability

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Uploaded on Apr 02, 2024 | 0 Views

Presentation Transcript

1. Inflation: How It Affects Your Bottom Line? Chad Hart Professor chart@iastate.edu 515-294-9911

2. Inflation Rate Source: BEA

3. Federal Funds Rate Source: FRED

4. Feds Outlook on Inflation Source: Federal Reserve

5. The Latest Dot Plot Source: Federal Reserve

6. Iowa Estimated Costs of Crop Production per acre by Expense Category, 2019-2023 Source: ISU Extension and Outreach Estimated Costs of Crop Production, File A1-20

7. Interest Rates and Charges on Preharvest Variable Costs, 2019-2023 Source: ISU Extension and Outreach Estimated Costs of Crop Production, File A1-20

8. 2022/23 Crop Price Projections Based on futures prices

9. 2023/24 Crop Price Projections Based on futures prices

10. Iowa Milk Prices Source: USDA-NASS

11. U.S. Dairy Export Values Source: USDA-FAS

12. Source: USDA-FAS

13. Source: USDA-FAS

14. Changes in Consumption Source: USDA-ERS

15. 9 Strategies to Manage Margins Concern: cash flow / liquidity Solvency is less of an issue 1. Protect your working capital 2. Avoid cash shortages 3. Diversify income 4. Revise production costs 5. Actively manage risks 6. Revise family living expenses 7. Secure repayment capacity 8. Revise growth strategy 9. Know your government support programs

16. Strategies: 1. Protect your working capital Revise recent asset purchases Revise share of rented land Revise scale of operation and fixed costs over next 2-3 years Manage taxes: visit with tax advisor Deferred payment contracts S179 Carry back operating losses to obtain tax refunds

17. Strategies: 2. Avoid cash shortages Plan for tighter margins/operating losses (renters) Secure operating loan/emergency loan terms Be very careful with new capital expenditures Maintain cash reserves and operating credit lines:

18. Strategies: 7. Secure repayment capacity Short repayment schedules reduce cash flow vs. long repayment schedules Try to extend repayment schedules on equipment & real estate loans (low interest rates) Work a plan with your lender(s) for 2024-2025

19. Iowa Farmland Values

20. Cash Rents Tend to Follow Land Values https://www.extension.iastate.edu/agdm/wholefarm/pdf/c2-10.pdf

25. Thank you for your time! Any questions? Ag Decision Maker: http://www.extension.iastate.edu/agdm/

26. Iowa State University is an equal opportunity provider. For the full non-discrimination statement or accommodation inquiries, go to www.extension.iastate.edu/diversity/ext. Iowa State University ofrece igualdad de oportunidades. Para ver la declaraci n completa de no discriminaci n o para consultas de acomodaci n, siga a este vinculo: www.extension.iastate.edu/diversity/ext.