As the ag economy swings, you should shift how you run your farm to stay competitive.
Times are changing in agriculture. The past few years have shown record prices, but now corn and soybean prices are near break-even levels for many farmers.
As these factors change, Rod Osthus, president of the R.C. Thomas Company, a seed sales training firm, says producers need to adapt. "Do you know how many businesses and farmers are caught in the paradigm of the 20th century?" he asks.
Osthus, who spoke at the Tomorrow’s Top Producer conference on Jan. 28 in Chicago, Ill., says many farmers are caught in what he calls the ag cycle. "This is ‘farmers always do what they’ve always done’," he says.
This ag cycle, Osthus says, affects farmers in these ways:
- Takes away your ability to plan early
- Takes away your ability to buy early
- Minimizes the effectiveness of your decisions
- Makes YOU irrelevant as a decision-maker
- Takes away your ability to be a leader
- Increases your cost of doing business
- Makes it impossible to significantly increase production
- Retards or stops business growth
"Luckily, every farmer can get out of the ag cycle by following four key steps," Osthus says.
1. Recognize your business is caught in the ag cycle (the past).
An example he gives is that 95% of farmers don’t want to plan for next year’s crop, especially seed varieties, until after harvest. "That’s too late," he says. "When the planter stops rolling, you need to start planning."
2. Stop relying on analogical thinking to make decisions (the past).
In many areas of farming, consistency doesn’t exist, he says. Every farming year is unique, and past successes don’t guarantee future successes. Additionally, Osthus says, technology changes everything so fast that you can’t keep up.
3. Develop a plan to increase production by 30-50% in five years (the future).
"Bushels trump everything," Oshthus says. "It doesn’t matter if markets go up or down; your only protection is bushels." With this being the case, he says farmers should do everything possible to produce as many bushels as possible.
He says these are the top five factors to producing a top crop:
- Soil conditions at planting
- Seed placement
- Seed quality
- Right variety in the right field
- Post-planting management
4. Change your circle of influence.
Osthus says you should think about who are your biggest assets but aren’t officially part of your business. "Who’s on your team?" he asks. "Who is giving you advice right now that can help you achieve your goals?"
He says all of these people, who range from bankers to crop insurance salesmen to your broker, fall into roughly four areas: production, crop insurance, grain marketing and ag finance.
"These specialists need to work together and help you make the right decisions," he says. "As a farmer, you need to get rid of the word independent. The word these days is interdependence."
Thank you to the 2014 Tomorrow’s Top Producer sponsors:
Bayer CropScience, Case IH, John Deere, Koch Agronomic Services, SFP