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Farming has always required thinking beyond this season. For many Ontario farmers, 2026 is shaping up to be a fairly strong year.
A high crop yield, favourable prices, or a particularly productive year can provide some welcome breathing room. As a farmer, you also know how quickly conditions can change. Weather, commodity prices, input costs, interest rates, equipment repairs, and other factors can make next year look very different from this one.
That makes a profitable year an opportunity to do more than celebrate the results. It can also be a chance to strengthen your farm’s financial resilience for whatever comes next.
Here are some ways to put a strong year to work.
1. Build your cash reserves
When revenue is strong, setting aside some of the surplus can give your farm a financial cushion. For many farmers, paying down an operating line or other debt may come first, particularly when borrowing costs are higher than what savings can earn. But there can also be value in keeping some cash readily available. Maintaining a reserve can help cover operating expenses or unexpected costs during a lean period without having to rely entirely on new borrowing. The right balance will depend on your borrowing costs, savings rates, and the cash flow needs of your operation.
How much should you keep available? There isn’t one number that works for every farm. Consider your regular expenses, debt payments, upcoming purchases, and how much your income can fluctuate from year to year.
2. Consider an RRSP contribution
For those who are sole proprietors and with available RRSP contribution room, a profitable year may be a particularly useful time to contribute.
An RRSP contribution can reduce taxable income in the year it is made, while the investment can grow tax-deferred. If a future year brings significantly lower profits, or even losses, funds can be withdrawn. The withdrawal would be taxable income in that year, so timing and the tax implications should be considered carefully.
Keep in mind that, unlike a TFSA, RRSP contribution room is generally not restored after a withdrawal. Talking with your financial planner and tax professional can help you decide whether this approach makes sense as part of your longer-term plan.
3. Make use of your TFSA
Again, if you are a sole proprietor, a Tax-Free Savings Account can provide another useful place to build reserves.
While TFSA contributions don't provide an immediate tax deduction, investment growth and withdrawals are generally tax-free. And, subject to CRA rules, amounts withdrawn are added back to your contribution room the following calendar year.
That flexibility can make a TFSA useful for money you want to invest while keeping it available for future needs.
4. Pay down debt strategically
A good year may also provide an opportunity to reduce debt, particularly higher-interest borrowing. It can also be a good time to look at how your debt payments fit into the farm’s longer-term cash flow.
For example, if your cash flow comfortably allows you to make payments above the required amount, you might choose to do so. Paying more toward principal can reduce debt faster, while building a little more room into your regular cash flow. If interest rates rise or the farm experiences a leaner year, having paid down more principal may provide greater flexibility to adjust or restructure debt if needed.
At the same time, paying down as much debt as possible isn't automatically the right answer. Farms need liquidity too. Before making a large lump-sum payment, consider upcoming cash needs, the interest rate on the debt, prepayment provisions and whether those funds might serve the farm better elsewhere.
The goal is to use a strong year to strengthen your financial position while preserving flexibility for the years ahead.
5. Plan ahead for equipment and other major expenses
The tractor will eventually need replacing. The barn may need repairs. Technology will need upgrading. While it may not be realistic—or even make sense—to save enough cash to cover every major purchase, planning ahead can give you more options when the time comes.
A multi-year capital plan can help you identify major expenses you expect over the next several years, estimate when they’ll occur and consider how you’ll pay for them. That might mean setting aside some cash during stronger years, planning to finance part of a purchase, or using a combination of both. Thinking about borrowing needs in advance can also give you time to explore financing options rather than making decisions when a replacement or repair becomes urgent.
6. Know which farm programs are available to you
A good financial strategy should also consider government programs designed to help farmers manage risk.
One example is AgriInvest, a voluntary producer-government savings program. Eligible producers can make a deposit based on their Allowable Net Sales and receive matching government contributions on up to 1% of those sales, subject to program limits and requirements. The funds can then be withdrawn when needed to help manage income declines or make investments in the farm.
If you’re eligible, understanding the program and meeting its deadlines can help you make the most of a stronger year. Talk with your Account Manager or accountant about the programs available to your operation and how they fit into your broader financial plan.
7. Do the math before taking advantage of a discount
Spending money earlier isn't necessarily the same as saving money.
Farm suppliers may offer incentives for purchasing inputs such as seed early. If you have the cash available, the discount could be worthwhile. But if making the purchase means carrying additional debt for several months, consider the interest cost as well.
Before taking advantage of an early-payment discount or other promotion, calculate the total cost. A discount that looks attractive upfront may be less valuable once the cost of borrowing is factored in. On the other hand, if the savings exceed the carrying costs and the purchase fits comfortably within your cash flow, buying early may make sense.
Looking at both sides of the equation can help you decide whether a deal is truly a deal for your farm.
Think in seasons, not just years
No farmer can control the weather, markets, or every challenge that may come along. What you can do is use the stronger years to give yourself more choices during the difficult ones. That might mean having cash available instead of borrowing, drawing from savings rather than selling an asset at the wrong time, or entering a challenging season with less debt.
At Kindred, we understand that farm finances don't fit neatly into a single calendar year. A member of our team can work with you to look at your farm and personal finances together and explore ways to make the most of the good years while preparing for the leaner ones.
Because sometimes the best thing you can grow in a good year is a little more financial breathing room for the future.
Book an appointment with a member of our team to discuss how making the most of this year’s revenue can help you meet your long-term farm goals.