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Plan for good things to happen

10/15/2021
Plan for good things to happen

Written by Graham McLean, Crop Sales Specialist, AGRIS Co-op, Glencoe.

We are all experiencing just how fragile supply chains can be, from equipment parts availability to everyday items we need for our farms. We have either experienced shortages or increased prices on essential items. This uncertainty has increased the level of risk in making farming decisions.

One of the keys to managing risk is to make crop plans. Plans by farm, by field, by crop, and by product, includes a marketing plan for grain movement and pricing. Part of the planning process is to produce a budget. We use a form called Return to Land Labour and Equipment. The form accounts for inputs and creates a table of gross income based on yield and commodity price. Knowing your cost of production and marketing opportunities can help manage the risks in a volatile marketplace.

Doing crop plans by farm and by field will focus decisions on inputs based on the needs of individual fields rather than working with farm average rates across all acres. Using current soil test and taking a 4R Stewardship approach of determining which products, rates, timing, and placement method best suits the field in question and optimizes financial returns.

This may be the year to implement site-specific soil sampling and determine not only at a field level, but where in the field do we need to place nutrients at different rates of application utilizing variable rate application technology to maximize profitability.

The Profit equation has two parts: Revenue minus Expenses. While important, focusing on the expense may cause one to miss market opportunities to forward sell grain at better prices. In addition to a crop plan to carefully plan for inputs, a grain marketing plan carefully crafted can help to capture better returns from the marketplace.

The following table summarizes nicely the agronomy program reflected as yield on the top line and the grain marketing plan on the side reflected as market prices. The table reflects gross profit (return to land labour and equipment) based on any combination of yield and market price.

ReturnToLandLabourAndEquipt_Graham_CSTW_14Oct2021.png

In this example, a yield of 200 bu. corn and a price of $6.25 corn will produce a return to land, labour and equipment of $788.00 per acre. I know that everyone will want to know what fertility rates,  herbicide programs, seed, and costs I used to produce this table. The table is introduced as a concept. The numbers that matter the most are your numbers.

We have a harvest to complete, and we will have some time later this fall into early winter to make both a Crop Plan and a Grain Marketing plan to optimize your returns.

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