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April 2012 Archive for Ask a Margins Expert

RSS By: Chris Barron

Chris BarronHave a margins question? Through this blog, you will gain insight into improving your bottom line, as a margins expert answers questions and provides farm business advice.

 

Equipment Efficiency Notes

Apr 23, 2012

 

There are never enough hours in the day during spring planting season. Even though this year has gotten off to a fast start, we all tend to push equipment and people to the limit. Rainy days are generally reserved for oil changes, repairs, and hopefully catching up on some sleep.
Consider another opportunity during your downtime. For example, many of us have experienced the first day back in the field when we remember two or three changes or adjustments to a piece of equipment we thought about making last year, but just never got to it or forgot about it. These minor repairs could have easily been fixed; however, it's the small things that get little priority. How much could the small adjustments or repairs add to your bottom line? How much does your downtime cost? Do the distractions of some of the small problems impact your overall efficiency?
There will always be breakdowns, challenges, and problems with equipment, even if your equipment is new. From year to year it's difficult to remember all of the little things. Settings, adjustments, and calibration notes can definitely help you improve time efficiency. The same holds true for carrying all of the right parts to the fields, such as sheer pins, clips, spare drive chains, and other various common replacement parts. Reminder notes from year to year don't need to be fancy. A small investment in a file box keeping notes for each piece of equipment can save a huge amount of time. At the beginning of each year you'll be able to supply each piece of equipment with the needed tools and parts to minimize downtime.
On the next rainy day spend some time writing down the things you forgot about this year. You'll be amazed at how much time it will save you next year!
Consider this; what is your time worth per hour at planting time?
If it takes 25 hours to plant 500 acres and your crop is worth $500,000 on those acres; your planting time is worth almost $20,000 per hour! This may be an extreme way to view the value of your time; however, time is always the component with most value - your equipment is at its highest value only when it's moving, instead of sitting on the edge of the field when it's time to go!
Attention to details will help to improve your margins every time!

A Little Rainy Day Fun

Apr 19, 2012

It's a rainy day and we're not able to plant. We've got about 13% of the corn in the ground and all the machinery is ready to roll! So we thought we'd have a little fun putting together this video, since the cat was getting his work out in today!

 

 

Sometimes a little lighthearted fun helps to recharge the batteries. Next week we plan to hit the fields full force.

 

Set Your Spring Price Goals

Apr 09, 2012

 

In the last blog we discussed the comparison of planting corn versus soybeans. Profit opportunities vary greatly from one operation to the next. Some operations may benefit from all corn, while others have more profit opportunity in soybeans. Regardless of your acre mix, the next challenge is achieving an acceptable market price. Most producers have very little sold at this point, especially compared to last year.
 
Now that the spring workload has increased, it's easy to change your focus from marketing to production. Be sure to set aside some time to structure your spring/summer pricing goals. It's likely we'll see some volatility in the coming months.
 
Pricing opportunities often come when we are distracted with other tasks i.e. planting, spraying, and managing the crops. Sometimes these pricing opportunities can come and go in the blink of an eye. If you're not able to constantly watch the markets, it's critical to either have someone watching this for you or place some offers to sell the grain.
 
Assuming you have your acres plan set for 2012; you can now determine your approximate total production. Consider some of the following questions. What percentage do I have sold currently for each crop? What is my average selling price? How many bushels per acre do I currently have sold for each crop? At what price level would I be willing to price another 10% sale for each crop?
 
Once you answer these questions, it will allow you to begin your plan for the next several sales.
No one truly knows for sure what direction the markets will go during the course of this growing season. On the other hand, you can determine what price levels are acceptable, achievable, and appropriate to manage your risk and profitability. Pricing opportunities may come and go rapidly this year, make sure you have your goals set and your offers in place.
 
Be sure to use a tracking device which clearly identifies your marketing positions. This allows you to specifically manage your decisions with accuracy, confidence, and discipline.
 
Here is an example tool for keeping track of your marketing and/or pricing offers.
 
Marketing Spreadsheet
 
If you'd like a copy of this "Market Tracking" tool, feel free to send me a request.

 


 

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