Don’t be afraid of what’s happening right now, be informed. As we face challenges heading into the 2022 crop year due to skyrocketing input prices, it is imperative we understand the environment in which we are making decisions, as they will have long-lasting impacts. Here are a few things to keep in mind:
- Talk with your input provider about your projected needs for fall and spring applications, and whether it may make sense to lock in prices now or wait until later. Remember, they are dealing with challenges right now, too! Communication is a two-way street, and much smoother if traveled with a level head and a plan.
- Make a marketing plan. If you make acreage plans based on input costs, you must make corresponding sales to protect your margin. If you have not been working on 2022 marketing plans, they need to be made in conjunction with 2022 acreage, cash flow, and budgets.
- Meet with your lender to talk about next year’s needs, wants, and wishes. Have a plan in place, and be honest about changes you are thinking of making in the operation, and how your profitability outlook may allow for, or restrict, your plans. Transparency is beneficial for everyone involved.
- Spend money to make money. The No. 1 way to lower your cost of production is to increase your bushels. Don’t miss the forest for the trees by reducing good farming principals in fertility, lime, and nitrogen management if possible. I know, this is where prices have increased the most.
- Talk with your crop insurance provider. I’m not an insurance salesman, but I could play one on TV. There are some quality products available to producers that may set you up for success in 2022. Know them and understand them. If your insurance agent doesn’t reach out to you with options, find someone who will.
On average the farm operations we work with are looking at $.68/bushel increase in cost of production on corn and $.80/bushel on soybeans. We still have profitability penciled in for 2022 (projected), just not to the extent of 2020 and 2021. Know your numbers and make informed decisions, and you may be pleasantly surprised with how things turn out next year.
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