Surviving Hard Times – Part I
Great Bend Tribune
Published January 3, 2016
While it’s too early to set in stone, it is certainly shaping up as a financially challenging year for crop and livestock producers. Crop prices, input costs, sluggish economies around the world, and many other factors will test the patience and skill of producers. This isn’t to imply input prices haven’t fallen but overall they haven’t fallen nearly as much as most crop prices.
In crop production, while there are ways to lock in prices, producers are price takers. They either accept the price or don’t sell. Total profit is a function of total revenue minus the total cost and total revenue is a function of the price per unit sold times the number of units sold. So how do producers increase profits? They can hope for a bumper crop. They can hope prices for their commodities increase. What normally separates producers that survive and are even able to make a profit during down times is their ability to decrease total costs relative to the amount they produce. This doesn’t mean they don’t spend money but that they spend it wisely. They increase their efficiency. The rest of this and next week’s column are devoted to ways of increase efficiency and investing money in 2016 crops wisely.
Keep in mind that this winter and fall have so far been quite different in terms of weather, especially moisture and overall warm temperatures which will affect the release of nutrients from crop residues and organic matter, the possible loss of mobile nutrients deeper in the soil profile, and affect the growth of winter wheat as well as spring seeded crops. The moisture also will present challenges for disease and weed control.
- For crops requiring nitrogen fertilizer (corn, wheat, sorghum, canola, etc.) a properly timed profile soil N test can determine the nitrogen status of the soil and when combined with realistic yield goal accomplishes. First it optimizes yield while not applying excess nitrogen. Second, it prevents wasting money through over application. This is especially beneficial when split applying nitrogen fertilizers as it allows for more adjustment of rates to potential crop yield.
- Crops such as wheat, alfalfa, canola, soybean and really all grain and forage crops benefit from proper soil sulfur levels. All plant proteins contain sulfur and crops, even wheat already in the ground, benefit both in yield and quality with proper sulfur nutrition. This test is very similar to the profile N test as it acts in the soil in a similar manner.
- General soil test. If a producer hasn’t recently conducted a soil test for pH, P, K and where appropriate micronutrients such as Cl and Zn, it is time. While an appropriately intensive grid soil sampling protocol is great, a good, old-fashioned soil test combined with knowledge of the fields can still greatly help determine proper fertilizer needs. While K (potassium) isn’t likely deficient for much of the area it is becoming more common and is a key nutrient aiding in drought tolerance and disease resistance. Measuring soil pH determines soil acidity or basicity which affects plant growth and nutrient availability. There isn’t room here but knowing and working to correct acid soils or managing alkaline soils is a key in efficiently using fertilizer and other inputs including herbicides and even variety/hybrid selection.
Part II
Last week’s column addressed soil testing as a way to increase efficiency and optimize fertilizer input costs. This week will tackle other decisions producers make to wisely use inputs and manage the cost of inputs. Those not involved in production agriculture sometimes don’t really understand that as much time goes into planning, book and record keeping, and managing finances as goes into the actual production of crops.
- Crop Selection – This may seem obvious but it would be beneficial to examine the distribution of acreage based upon projected weather patterns, crop prices and input costs. It can be a bit like playing whack-a-mole at times but important in trying to maximize revenue and minimizing costs. Wheat is already in the ground but summer crops are yet to be determined. And there are market tools such as futures, calls, and puts that can help in this area.
- Input Costs – Currently prices of many fertilizers are well below last year’s highs. Once a producer has determined his crops, acreage, and realistic yield goals, he or she can determine the approximate amount of total nutrients needed for the crop. Then many fertilizers can be purchased now for much lower prices than when demand increases. The same can be done for herbicides if the price is attractive. And if convinced fuel prices are about as low as they will go, the same can be done for fuel.
- Maintenance and Repairs – During winter, business at farm machinery business tends to slow down. As a result, specials and discounts are offered to repair and overhaul equipment. There are often price breaks for parts. As a result, many producers have maintenance and repairs performed for lower prices. The other advantage of having equipment in the best shape possible is minimizing downtime and maximizing the time in the field which translates into timely operations, less wasted time, and often improved yields.
- Crop Monitoring – After you have done all the previous items mentioned the last two weeks and the crop is in the ground, one of the best ways to increase efficiency and optimizing production is for regular crop monitoring for nutrient status, pest pressures, and other stresses such as soil moisture. This can be performed by the producer, a crop consultant, an agronomist for companies such as co-ops. Irrigation is expensive, even with lower energy prices. A good irrigation scheduling protocol optimizes water use, minimizes waste, and for certain operations actually increase yield by eliminating overwatering. Pests can significantly decrease yield and/or quality so regular scouting can prevent economic loss. Monitoring nutrient status is similar in that for many nutrients, not all, plant tissue sample can allow deficiencies to be addressed that will lower yields.
As always this column ends with the words, “Naturally there is more and this is just a partial list.” We could have added new technologies and alternative markets to the list along with many other potential ways to increase efficiencies.