Strategies for a profitable ‘17


Happy New Year! I hope all of you have had a wonderful holiday season.

Are you one to make a New Year’s Resolution? Is it to lose weight, be nicer to people, save money?

I gave up making resolutions because something always throws a wrench into the process — like wanting to lose weight and for some reason food and a lack of willpower gets in the way.

I don’t like dwelling on the past but I think it is worthy to point out a few items that I think will impact 2017 for agriculture. As I look back, the farm economy as we all know is down from what it was just a few years ago. Commodity prices were below levels we had seen from 2010 through 2013. U.S. and world supplies remain abundant. Commodity demand also continues to suffer from prolonged slow economic growth in much of the world.

The lower prices are expected to persist until there is a shortfall in production in a major producing region or until U.S. and world economic growth accelerates.

Livestock prices reached a peak in 2014 due to reduced red meat production resulting from high feed prices, drought conditions in cattle producing areas, and disease in the U.S. hog herd. Production has now rebounded and prices have declined sharply. Further production increases are on tap for 2017.

Input costs continue to have an impact on profit margins and will continue to impact profit in 2017 even though we have seen some input costs start to come down.

Weather will continue to effect production. The idea of climate change is on everyone’s minds. What will be the impacts on 2017 production? Will there be drought, will there be a delay in planting again like we saw in 2016?

Land costs are a huge item of discussion. Whether purchasing or renting, how does it affect the bottom line in your operation?

Crop threats such as weed pressure, disease, and insects can and have impacted certain operations. How have you and how will you manage weeds in your operation? After this past year of finding Palmer Amaranth, more water hemp, and continued identity of resistance with marestail and giant ragweed are you prepared to address weeds issues.

Our recent weed management program had a nice crowd but I wish I would have seen two hundred producers in attendance. Oh I know we have the next best thing coming with some new herbicides that are supposed to “Take care” of problem weeds. Keep in mind they will only be as effective as the management behind them.

Having seen the impacts of the 80’ farm crisis up close and personal with my family, I think we are moving into a caution zone in agriculture and farm families will need to be aggressive in managing production, marketing, finance etc.

Recently, Barry Ward, Leader, Production Business Management at Ohio State University outlined in a release from OSU nine strategies for farmers to consider in Ohio to remain profitable in 2017:

1. Reevaluate crop production inputs such as prophylactic fungicide applications and specialty fertility products.

2. Forgo phosphorus and potassium fertilizer, if soil tests show there’s enough in the ground for the coming crop.

3. Review and adjust nitrogen rates and application timing.

4. Re-evaluate seed technology. Seeds with fewer GMO traits are usually less expensive. But this will require more management time — you may have more weed pressure, more insect pressure. You need to weigh the pros and cons — and if you’ve done some on-farm evaluation, you will know what works and is worth the investment.

5. Eliminate excess equipment and re-evaluate equipment sizing. “The secondary markets are soft, so it’s not the best time to sell excess equipment. If there is a true need for equipment, this would be the time to buy,” he said.

6. Renegotiate cash leases. The economics of the past three years have cried for a lowering of cash leases, but they have held up because of equity positions on behalf of farmers and landowners’ property taxes. Landowners need to understand that margins have declined and lease prices need to come down.

7. Consider more do-it-yourself repair and services, including spraying, soil sampling and equipment repair.

8. Evaluate farm yield ratios with price ratios when determining crop mix.

9. Re-examine family living expenses. This will not be easy to do, but family living expenses need to ratchet back to pre-2006 levels. According to Illinois Farm Business Farm Management data, family expenses were $85 per acre in 2006, compared with $110 per acre in 2015.

Finally, take the items above seriously and look at your budgets, your return on investment, what you can do without etc. I am sure there are more items we can all identify in our operations to help remain profitable. 2017 is going to be another exciting year for agriculture with great possibilities and opportunities.

Do your homework and be ahead of the curve rather than below the curve of farm profitability.

Tony Nye is the state coordinator for the Ohio State University Extension Small Farm Program and has been an OSU Extension Educator for agriculture and natural resources for 28 years, currently serving Clinton County and the Miami Valley EERA.

Tony Nye

OSU Extension

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