The familiar phrase “cash is king” probably resonates with a lot of tree nut growers given the current economic climate, but capital comes in many forms and it’s important to plan and think strategically about the costs and benefits of using various forms of capital to cash flow your orchard to be profitable. We’re seeing positive movement in terms of tree nut prices, but the general economic environment across the ag industry is still tight.

Cash reserves are shrinking following the last few years and lenders are taking a more conservative approach in 2025, so accessing capital may be more of a challenge. Growers need to be prudent in how they budget and manage their money. Here are a few tips to help spend your money efficiently so that every investment you make, including those on operational expenses, earns a return.

Utilize a Diverse Mix of Capital to Maximize Cash Flow
Money comes in many forms including prepay, bank lines of credit (LOCs) and financing offers. The most successful growers understand that there are unique advantages to using all these sources of capital and you get the biggest benefit when you align your method of payment with specific expenses, whether it’s operating expenses, land purchases, equipment costs, nutrition and crop protection products or the everyday variety of unexpected expenses for which you simply cannot plan. Taking the extra step to strategize the most profitable way to pay your expenses will help your bottom line.

One proven strategy is to use both low-cost financing solutions from a retailer and a bank LOC as part of your capital management strategy. You’ll pay a bit of interest expense, but interest is a necessary evil in business and the benefits of having capital accessible from both sources outweigh the nominal cost of interest. You increase your buying power and create more financial flexibility in how you leverage cash, which is a critically important commodity to have when markets are down.

For example, let’s say you borrow $100,000 from a retailer to purchase herbicide. At a 4.9% APR, your interest expense will come in at $4,900 for the year. For that cost, your bank LOC can use $100,000 for other expenses throughout the season, which helps to increase your buying power and create more financial flexibility in how you leverage your budget. Using LOCs from multiple sources also keeps your cash available.

Bringing this level of strategy to your capital management will help you maximize the value of every dollar spent.

Look Beyond Interest Rates
Most growers are laser-focused on getting the lowest rate and often overlook important details in the terms of financing offers. In many cases, the terms of a loan, including payment due dates, late-fee penalties or fees that might surprise you for an early payoff, can have an even larger impact on your bottom line than the interest rate.

As you’re exploring financing offers to cash flow your orchard, it’s important to do your due diligence and look closely at the terms of a loan. Don’t just assume that a lower-rate option will offer the best value in terms of borrowing costs. When you evaluate terms, consider the following:

Does the payment schedule align with your crop? Shop for financing offers that include a payment date that comes after harvest payout is in your pocket.

What is your total cost to borrow? Review the fine print and do the math to compare the terms of various financing offers to understand the total cost of borrowing. Often you see financing offers advertised at a hard-to-pass-up 0%, but if you look at the fine print, you see that the promotional rate only lasts for so long before jumping up in double digits. Most of the time, the 0% option is going to come with strings attached which can increase the total cost to borrow.

Are you getting value from financing? Don’t overlook the timing and payback benefits of your LOCs. Using financing as part of your capital management strategy is a smart move, but it can be complex. Work with people you trust who have your best interests in mind to help you research options and the many ways to leverage your capital.

Get into the Habit of Monitoring Your Financial Health Regularly
You must keep track of how you’re spending your money to ensure your capital management strategy is working and positively impacting your bottom line. One way to do this effectively is to plan a monthly check-in and run through a list of financial to-dos.

This might include things like listing your expenses and allocating them when they are due so you know your cash flow needs, reviewing balance sheets and assessing your cash reserves. One thing that all financially successful growers have in common is the attention they pay to their breakeven point and total per-acre investment. It’s also good practice to track and update those figures throughout the growing season so you have a target for harvest in terms of both yield projections and price.

In ag, there are many things beyond our control, but how and where we spend our money is not one of them. Making strategic decisions to manage your capital will give you financial flexibility, peace of mind and every opportunity to be profitable this year and for the long term.

Jacquelyn Fernandes is a territory manager with Nutrien Financial. She provides financing expertise to tree nut growers throughout California and Arizona.