The learning curve in agriculture has been steep the past few years. While droughts and floods, bugs and weeds have challenged farmers’ livelihood, commodity prices have been in their favor. That’s all changing. Not the weather and pest part—they’re here to stay. Record-high grain prices, on the other hand, are gone for now. That’s welcome relief for livestock producers and cause to pause for grain farmers.
“This is it; 2014 is the dip in the roller coaster we’ve been preparing for,” says Moe Russell, Farm Journal columnist. “Working capitol will take a hit because of the value of corn, but farmers will have to mind the details to balance current assets and liabilities, along with availability of credit.”
In short, sharpen those pencils and keep them sharp. Most importantly, keep your wits about you and recognize that the fundamentals for agriculture are strong. In the midst of the downturn in grain prices, there’s some good news. As an industry, farmers are prepared for this new normal.
“Net farm income for 2013 is projected to be a record high, and at the same time, farmers’ debt load is at a record low,” explains Chip Flory, editor of Pro Farmer. “Our industry is ready for this changing landscape.”
Record-high exports and a strong trade surplus, Flory notes, are also bright spots that add strength to the industry’s fundamentals. “On top of that, yields are climbing and can help offset the lower commodity prices,” he says.
As you look ahead to 2014, capture savings by locking in input needs sooner rather than later. Keep an eye on interest rates; they’re sure to go up. Start paying attention to outside pressures on modern-day production agriculture.
Flory’s advice: In the midst of change, keep calm and carry on.
Input Analysis
There are cost savings to be realized with fertilizer, but don’t shortchange your crops.
Marketing
Lock up a moderate profit rather than taking the risk of being forced to sell below cost.
Yield Push
Hybrid placement involves managing the weakness of a hybrid to maximize its potential.
Tax Acumen
Strike a balance with your tax liability so you don’t crimp your financial situation.
Succession Planning
Don’t focus on things. Possessions diminish when divided; values multiply when shared.
Data Decisions
Put precision technology to work to harvest more bushels per acre.
Labor Pains
Hire based on attitude, not aptitude alone, keeping the culture of your operation in mind.
Crop Insurance
The ability to protect your investment takes on new meaning in light of weather extremes.
Policy Shifts
Be on the lookout for a farm bill decision, RFS adjustments and the long arm of regulation.
Margin Control
Evaluate break-even points based on short- and long-term aspects.
Trade
Corn exports need to rebuild to pre-drought levels; soybeans need to uphold their pace.
Health Care
The Affordable Care Act takes health care options and costs to a whole new level.
Grain Storage
Everything done now to maintain grain quality buys more time in storage.
Safety
Create a detailed map of your farmstead and share it with local emergency personnel.
