2016 Classic Roundup

March 19, 2016 02:24 AM

Here’s some of what you missed at Commodity Classic

Farmers from across the U.S. got to talk about what’s ahead for agriculture with each other and many of the organizations that serve them at the 20th annual Commodity Classic conference and trade show. With more than 300 exhibitors, even if you were among the 10,000-or-so people who attended, it was hard to keep up. Producer panels, policy updates and new product displays provided perspective on the ever-evolving industry. Here’s a look at some of the key takeaways, news and insight from Commodity Classic. 

Keys to Success in Today’s Market Environment

Now more than ever, farmers need to manage risk to survive these trying times, said Bret Gloy, Purdue University ag economist and Nebraska farmer. He offers these strategies:

  • Stay laser-focused on costs. Gloy suggests looking at your big-ticket variable expenses, such as equipment, land and rents. 
  • Manage working capital. Understand how quickly your assets can be converted to cash and how that affects your bottom line.
  • Pay attention to debt repayment capacity. 
  • Pursue “good deals” with discipline. Have clear priorities for your operation, Gloy said, and then use discipline to only take good deals on land, equipment or other opportunities.
  • Scout and crunch. Don’t go dark on your crop and marketing plans after planting—get out in the fields and crunch your numbers. “An extra hour to manage your crop is a good investment,” he said.
  • Manage relationships. To spread out costs during tight margins, consider investing in technology and other systems with other farmers.
  • Don’t forget about price risk. “It’s not fun watching the grain markets as they crank lower every day,” Gloy said. “A lot of people just shut off.” Instead of making that mistake, pay attention and be ready to pull the trigger when prices are close to your breakeven costs.
  • Manage risk beyond crop insurance. Succession and estate planning help reduce risk as much or more than crop insurance, Gloy said. If somebody left your operation today, do you have someone who could fill in? Fix any gaps with training and backup plans.
  • Consider alternatives. Today’s times call for creative thinking when it comes to leases, equipment, crop rotations and business structure. Think outside the box for ways that could help your bottom line.

Things Aren’t All Bad

Neil Bentley, BASF’s director of marketing for its U.S. crop business, told farmers things aren’t all negative in the ag economy—there are positives, too. For example, though farmers face the headwinds of a stronger U.S. dollar (making exports more expensive), higher interest rates and increased competition from the Black Sea and Latin America, there are tailwinds, too, including a stable U.S. economy, historically low debt-to-equity levels and strong domestic market for grains. 

The current weak cycle in the farm economy isn’t taking quite the toll on farm lending as predicted, said Bill Johnson, Farm Credit Mid-America president and CEO. So far, his organization’s loan portfolio isn’t taking as bad a hit as anticipated. 

“I don’t know that next year will be the same,” Johnson said. Here’s hoping, anyway.

Export Intel 

The Barack Obama Administration is including funding to establish USDA activities in Cuba in its budget proposal, said Alexis Taylor, USDA deputy under secretary for Farm and Foreign Agricultural Services. The island nation of 11 million people will provide a worthy new market. 

It’s interesting to note for every $1 in ag exports, $1.22 returns to the U.S. in economic activity, she said.

You Can Appeal

Farmers have a right to file an appeal if turned down for a USDA farm loan, their mortgage was accelerated or they’ve been denied USDA assistance or a grant. Get in touch with USDA’s National Appeals Division at www.nad.usda.gov.

Stand Up for Ag ... and Monarch Butterflies

The battle against misconceptions about farming rages on. Some agricultural companies are asking—and equipping—farmers to defend their way of life by speaking up for modern agriculture and taking action to protect the environment.

Bayer hosted an AgVocacy Forum to provide farmer attendees with tools to use when speaking with consumers. One of the speakers claimed 66% of the country doesn’t believe agriculture is important to the economy, 88% don’t trust crop protection companies and 74% want food to be produced without pesticides. 

To encourage others to get involved in their communities, Bayer hosted 12-year-old Braeden Quinn of Delaware, who told the crowd about his charity to help feed the hungry. “We can all do something,” he said. “And giving food to people is a great thing to do.” 

BASF is encouraging farmers to protect their right to operate by promoting the repopulation of the Monarch butterfly, whose numbers have dropped in recent years. The company is encouraging farmers to establish small milkweed plots in nonproductive acres on their farms. The important pollinator depends on milkweed for its reproduction, and milkweed is sensitive to common herbicides. BASF is conducting research to help farmers enhance biodiversity on their farms and encourages farmers to do what they can.


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