Sep 19, 2014

Have 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.

The Results from our Wind-Damaged Crops

Oct 31, 2011

Unfortunately wind played a major role this year in the list of challenges for growing corn. As I pointed out in the July 17 blog, it's difficult to know for sure your level of production until the grain is in the bin.

This windstorm swept across a large portion of the Corn Belt. Because of the unknown yield damage many producers throttled back sales to almost a standstill. Some producers already had sales to their insurance levels. Others may have only had small percentages priced. Regardless of where farmers were with their marketing, after the storm almost all of them halted sales.

Now that much of the wind damaged crop has been harvested we can begin to calculate margin opportunity with certainty. There is no perfect solution or absolute formula for determining the correct market price. On the other hand, once you have harvested the grain, you have an absolute yield and can determine what profit margin is appropriate for your operation. Therefore, the perfect solution depends on:  (yield*grain price) - cost of production. Once you calculate gross income per acre you can decide on a margin level which is right for your operation.

Here is a margin tool for calculating different yield results. This tool will help you to determine reasonable price goals as well as to compare farm to farm results.

 Margin Opportunity Calculator Fill in the Tan Boxes #1, #2, #3 CORN Green Boxes Report Information Results Farm #1 Farm #2 Farm #3 Farm #4 Farm #5 Yield 204 186 177 164 147 Grain Price \$6.43 \$6.43 \$6.43 \$6.43 \$6.43 Cost per/ac. \$876.00 \$876.00 \$876.00 \$876.00 \$876.00 Cost per/bu. \$4.29 \$4.71 \$4.95 \$5.34 \$5.96 Income per/ac. \$1,311.72 \$1,195.98 \$1,138.11 \$1,054.52 \$945.21 Income per/bu. \$6.43 \$6.43 \$6.43 \$6.43 \$6.43 Margin per/ac. \$435.72 \$319.98 \$262.11 \$178.52 \$69.21 Margin per/bu. \$2.14 \$1.72 \$1.48 \$1.09 \$0.47 Margin -- ROI 49.7% 36.5% 29.9% 20.4% 7.9%

Here are some pictures from the windstorm that we experienced on our farm. What looked like total destruction, turned out to be 200 bu. /ac. corn. Other areas weren’t as fortunate, some had significant yield reductions. With the significant variability in yields this year, it's all the more reason for utilizing margin tools.

This picture was taken the day of the storm. 75 mph winds

48 hours after the above picture of the same field.

Harvest: 6 Row Plots Averaged over 200 bu. per ac.

If you're interested in the above margin calculator, let me know.

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