Rethink Your Plan
By: Jerry Hartsock & Dakota Miller
Cutting Edge Consulting
With corn and soybeans up over a dollar from their lows, it is time to rethink your plan for those who listened to money- savers in their circle. We’ve always believed that people who only preach that reducing input costs when commodities are low is the way to survive, do so because they usually don’t know how to raise higher yields that pay off. You shouldn’t lose sight of the fact though that reducing input costs only works if yields aren't reduced! It is imperative to know how to strategically cut where there is the least amount of risk to yield reductions.
As consulting agronomists, we believe that rebuilding equipment versus buying new is a cost-saving option to consider as you think ahead regarding tax planning. However, be aware of depreciation and reduced residual value of equipment that will be one, two, three or more years older when it is eventually traded. We believe production agriculture (corn and soybeans) is basically a zero-sum game. We see farmer-customers that do the “extras” like planning and planting better, fertilize better (including multiple forms and applications of nitrogen and sulfur), use starter fertilizer, provide safe and effective weed control, apply fungicides (once or twice), and incorporate early harvest strategies that spend $50-60 more per acre - gain 40-60 bushels per acre more and thus get a great return on their investment.
From an independent voice, here are some considerations to think about before you implement your cost-savings mode.
Brazil is way behind in planting of their second corn crop which historically has led to much less yields.
The Delta will begin planting corn in about four weeks. It will be interesting to see if they either plant corn, soybeans, rice, cotton, or another crop.
Cash corn for many is $4.50-$5.00 per bushel (a surprise to most).
Cash soybeans have approached $10.00+ per bushel.
Spring ammonia, 10-34-0, 6-24-6, etc. will be more expensive now compared to last fall, especially due to the rise in commodity prices.
Really consider adding sulfur to EVERY nitrogen form and pass when you schedule an application (target 25-35 lb/ac total sulfur for corn) and consider adding a sulfur source for high yielding soybeans as well.
Consider gypsum (calcium sulfate) instead of, or in conjunction with, lime when looking to build calcium levels and sulfur supply or for long term assistance in building some soil structure/tilth.
Get better at the basics before looking for biological silver bullets. Sugar, PGR’s, humics/fulvics, etc. can be a way to increase yields if you are best at the basics like planning, planting, etc.
Know your breakeven point for corn and put a plan in place to get the maximum yield to be the most profitable.
200 bpa x $4.50/bu = $900.00
225 bpa x $4.75/bu = $1,068.75
245 bpa x $4.60/bu = $1,127.00
275 bpa x $4.50/bu = $1,237.50
$200/ac profit x 1200 acres = $240,000 profit before taxes
Know your breakeven point on soybeans.
55 bpa x $10.00 = $550
60 bpa x $10.00 = $600
65 bpa x $10.00 = $650
70 bpa x $10.00 = $700
75 bpa x $10.00 = $750
80 bpa x $10.00 = $800
Have you replaced a weak link on your farming circle of influence lately to make room to bring on a money-making crown jewel?
Having the bushels to market really matters especially when you have the storage to take advantage of the carry in this market rise.
Taking on this mentality and acting on this advice is a big key of the Maximum Profit System™ that AgVenture believes in. Let’s work together to produce more this year!
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