Just a few weeks ago I remember telling a client that we’ve just seen one of
the best planting conditions… early, warm and dry. Then we had two and a
half weeks of cool and rain I’m wondering about the accuracy of that comment!
Well, I suppose planting was good, but the early growing season has been
tougher than expected. A number of fields are losing the strong stand they
started with… whether from seedling blight or poor emergence. With that said,
early planting generally makes big yields so I’m excited for what the year holds.
Hopefully this newsletter finds you well and offers some tidbits that add value
to your decision making.
"Preserving Profit”" by Daryl Starr, CCA, President
Preserving profit with less apparent cost of production changes is critical.
Since 2006, we’ve seen inputs rise and fall along with grain prices. Assuming
you weathered or conquered the swing and spreads available we’re now
advising clients to take a tighter focus on the non-apparent costs. I’ve seen a
number of accounts have an equity shift to fixed assets. That is, the upgrade
of machinery, grain handling, trucks, shops, etc. All this is fine, but from
perspectives in other sectors of ag (like livestock) these investments can slow
asset turnover if not properly managed.
Besides assuring the highest level of asset turnover and accelerated income,
have you stress tested your books for a depressed market value in row crops?
What if machinery market value turned along with land? Would your lender still
be on your side? If you’re leaning on profitability to secure loans and the
market says profit isn’t there, do you have the equity and free cashflow to ride
the wave until they rejoin you? You don’t have to show your banker these
stress tests, but you need to think about them regarding your in-house
management. I encourage you to visit with some industrial contacts that have
been through the economic downturn while row crop farming was so good.
They might help you preserve the legacy you strive for.
Learn more about Farm Risk Management.
How We Scout Early Corn
Measure 17 ft 5 in (for 30 in corn), count one row of live growing plants, then
count back on the next row, average the two. Review the rows for insect,
disease and emergence and planter performance. Make notes in per acre terms,
averaging both rows again. Observe weeds and other issues between the rectangle
created in the rows and make notes about weeds and other issues that may be present.
We then observe the field as we walk point to point and make general comments about
entire field or note worthy areas (low ground, the knob, etc). Finally, we make notes about
blow holes and other objects of spatial interest along our path. We sometimes take pictures
and can send those. At the end of the field we can often make generalized comments about
the whole field or group of fields, sharing opinions and possible next steps.
Meet the 2010 Crop Scouts
Learn more about our 2010 AAS crop scouts. Their bios are
now posted.
Your Opinion
