Investing in Information

Published on: 19:54PM Jul 21, 2008
Investing in Information
Few summer situations are more enjoyable than visiting with a group of high school classmates, especially when several who are successful farmers and their sons or daughters’ families are now in their business. It’s enjoyable conversation and makes it well worth the 1,600 mile round trip from Minnesota to Michigan.
The conversation quickly moved to what was top of their minds; input costs. These producers even used the term, “input costs” rather than referring to fertilizer, chemicals, etc., possibly because the top issue was not only fertilizer and chemicals, but seed. And especially the outlook for seed – number and types of traits, and costs, they expect to face by 2010.
But the discussion did not turn into a traditional over-the-fence complaint about why prices are increasing so fast, who is to blame, and why a further doubling of seed prices will never take hold among farmers like themselves. It was surprisingly different; they were not only accepting this change as perhaps inevitable, the next generation of technology is in the pipeline and close to market, but asking each other about the best ways to manage this situation. Specifically, they were talking about managing with higher seed costs, but also the opportunities they expect to see with these genetics. They are convinced they will be better able to manage future production risks, from nutrient and moisture availability to better pest protection traits than those available today, giving them more time to focus on marketing opportunities.
How are they changing their own approach to manage these risks? Gaining as much information as possible, following the management principle: “Ask enough questions and the answer becomes obvious.” They depend on trusted information sources; network of other producers, retailer agronomists, university contacts, favorite industry magazines, and with the younger generation relying very heavily on the internet. But one source was being discussed that many of these producers may not have mentioned a few years ago – seed company researchers and research sites.
These farmers are taking time this summer to travel to seed companies, usually further west into Indiana and Illinois, to visit with the researchers first-hand who are developing these new genetics. They feel this level of information gathering, well beyond a visit or two to a local test plot, is essential to understand the products that will arrive by 2010. They have an urgent sense of planning today for building these new technologies into their operations two and three, or more years into the future as part of managing risk. They all felt it will be much riskier, perhaps too risky, to wait until the fall before spring planting to make decisions for the next season.
A big part of developing above-average management skills is to keep surprises at a minimum, bad or good. Today’s crop prices may have been a nice surprise, but it could leave the best producers unprepared to manage the next round of turbulence that is sure to take place. Getting the best information, from the most reliable and direct sources, is one way to help manage the risk in your favor when it does happen.