Have A Strategic Plan for 2012

June 14, 2011 08:53 PM
Have A Strategic Plan for 2012

It’s important for producers to have a strategic plan both for 2012 and how they manage in the best of times. “You have to position yourself for high expenses in 2012,” says Steve Johnson, farm management specialist at Iowa State University. Johnson spoke at the Top Producer Summer Seminar in Bettendorf, Iowa.

Seed prices have not changed all that much. “But fertilizer prices are ready to take off,” he says. “Costs are coming. You’ll have to manage them and margins.” The latest Iowa State University estimated corn prices for the 2011-12 marketing year call for $5.80/bu. national average cash prices, based on 92.2 million plant acres and yields of 161 bushels/acre. Soybean prices, meanwhile, are forecast to be $13.50/bushels/acre, based on 76.6 million acres and 43.3 bushels/acre.
ISU, however, says that $7.50 corn has an 18% chance. “But that would not be pretty. It could do a lot of damage,” Johnson says. Several speakers at the Seminar spoke about the risk that run-away corn prices could do to longer-term demand.
Johnson says there are five crop related uncertainties that producers need to be aware of as they develop their strategies: global economic stability; government debt and expenses; funds’ risk aversion; inflation and interest rates; and weather.
He added that it’s important for producers to manage costs, crop revenue, margins, and know costs by crop, farm, and by rotation and prepare for the future. “These are the best times in the history of agriculture, and they’re back to back. What will happen, though, when we go back to the true value of commodities?”


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