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Farmers Need to Look Past Price to Manage Profitability

February 7, 2012
 
 
 

 

This week at Top Producer seminar Chris Barron of Carson Barron farms and the blogger behind Ask a Margins Expert, took a minute to share some key ways that farmers can manage their profitability in today’s marketing environment.
 
Barron says that farmers need to consider cost of production, yields and prices when managing their margins and predicting profitability.
 
"One of the things that we focus on primarily as producers is price, and it is important but so is yield and input cost," he says.
 
Barron says that in the future producers need to get a handle on the tools they can keep at their fingertips that will help manage margins and overall profitability.

 

 

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COMMENTS (4 Comments)

familyfarmer - NE
Chris - No kidding. Isn't this stating the obvious? On our farm, my husband and I have worked together every year to create a budget that includes price AND yield AND cost considerations. Anyone who has financing for their operation is required to do this anyway! We adapt our operation every year because there is so much variance in where profitability lies. Sure, in recent years the price has created a very profitable environment, but ten years ago this was not the case whatsoever. There's also more to consider than profitability; rotating corn and soybeans may not be the most profitable in the short term, but controls disease and pests in addition to creating a more favorable environment for the next year's crop.

4:59 PM Feb 7th
 
familyfarmer - NE
Chris - No kidding. Isn't this stating the obvious? On our farm, my husband and I have worked together every year to create a budget that includes price AND yield AND cost considerations. Anyone who has financing for their operation is required to do this anyway! We adapt our operation every year because there is so much variance in where profitability lies. Sure, in recent years the price has created a very profitable environment, but ten years ago this was not the case whatsoever. There's also more to consider than profitability; rotating corn and soybeans may not be the most profitable in the short term, but controls disease and pests in addition to creating a more favorable environment for the next year's crop.

4:59 PM Feb 7th
 
tired
Exactly right that we need to know cost of production to far for a profit. One little problem with that though--if your chemical and fertlizer dealer will not quote price at thsi time of the year you cannot do that.
In my case there is only one dealer in the area and he will not quote prices either in December or at the beginning of the year yet does offer a early pay discount.
I'm debating how to deal with this.
8:12 AM Feb 7th
 
tired
Exactly right that we need to know cost of production to far for a profit. One little problem with that though--if your chemical and fertlizer dealer will not quote price at thsi time of the year you cannot do that.
In my case there is only one dealer in the area and he will not quote prices either in December or at the beginning of the year yet does offer a early pay discount.
I'm debating how to deal with this.
8:12 AM Feb 7th
 



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