Farm Management Minute: Dismiss events or utilize the examinations?
It seems as though many producers I talk to can’t wait for 2019 to be over. With the cold, snow, rains, mud, roads damaged, delayed or no planting, continued mud, hay and small grain harvest delays, etc. it has been quite a struggle thus far. Most recently, continued less than ideal commodity trade conditions, debatable crop reports, ethanol versus oil, and beef packing plant issues. On Sept. 7 market analyst Jerry Gaulke stated, “Bottoms are made when the psychology is the worst, and we’ve got to be close because the farmer psychology, the economic psychology and banker psychology is all about as bad as I’ve seen it in years.” I sure hope things can turn around soon in the ag sector because, as Anne Murray sang in 1983, “We sure could use a little good news today.”
We must use this year’s events to keep going forward and utilize the experiences for reference when such conditions come again. All the calculations you may have done when determining whether to keep trying to plant or take a prevent plant indemnity should be noted in this year’s crop enterprises. Some had that dilemma answered for them with more rains throughout June. This will be a good year to attend test plot tours to see how certain hybrids performed in these conditions of later planting and excess moisture. In forthcoming years, you may be dealt with hail damage early in the season. The question will arise to leave the damaged stand or replant at the later date with wet conditions. Having data available on the performance of 2019’s crop will be beneficial. Making hay “while the sun shines” has been difficult with showers seemingly every 3-4 days. While looking back, do you need to implement changes in how you are able to harvest your hay? Possibly a preservative treatment is necessary on your baler, or chopping is to be considered.
Livestock producers have battled the compromised roads with difficulties getting feed and animals in and out. Also, the pens have been difficult if not impossible to maintain a feeding path or area. Do you need to think about “back up” methods if such events arise again? Prevented planting indemnity, as is available for crop production, does not exist for the cattle feeder. If his/her lots are unusable because of flooding, etc. that is a substantial source of income that has been lost. We have had ample grass this year for grazing, but with the muddy conditions even in the open pastures, foot rot has been a troublesome issue. Although, I’ll gladly take the foot rot treatments and losses over a barren pasture!
Now is the time to be reviewing your cash flow as to how this year’s loss of (or certainly a change in timing of) income and expenses will affect you. Prevented planting may have covered your cash rent and/or property taxes and some of what pesticides you needed to control those acres, but many of your overhead costs are still present. Insurance on property and vehicles, fuel outside of planting or harvesting, utilities, labor, machinery depreciation, principle and interest on long term loans all still need to be paid even with lower or no planted acres.
On the personal side we still need to eat, maintain a home, pay for health insurance, get the kids to school, etc. Can there be some cuts made in your household budgets? For example, cell phone plans, satellite television, “convenience food,” and recreation? It will be much too late to adjust our expenditure when loan renewal time comes next winter/spring.
Do you need to seek some (or more) off-farm employment? On the other hand, many folks may be surprised at how their Schedule F may play out for 2019 if you don’t do some forecasting. 1). Did you prepay some inputs in December of 2018 but may not in 2019 because you have a credit going into next year? 2). Did you sell more of last year’s crop in 2019 than you normally would because you had stored and waited for a price increase? 3.) If you take a 2019 crop insurance indemnity and an MFP payment in 2019, are you doubling up income and likely will have fewer 2019 cash expenses because of less acres? An income statement with accrual adjustments at year’s end is much more accurate to display the year’s performance.
These are all points to consider and can only be addressed by having your records up-to-date and correct. I encourage you to do your “homework” if the weather is not cooperating for your intended task. Don’t feel like you have to do this at night or when you think everything you could possibly do outside is done. This is a very important chore. I encourage you to do it during business hours so if a question arises on a bill or bank statement you can investigate it while fresh in mind.
As I’ve heard leaders in agriculture say, “Good times don’t last, but neither do bad.” Opportunities can arise from seemingly bad situations. Keep your head up so as to see them if they occur!
If we can be of assistance on your farm/ranch to help with recordkeeping tools and preparing and interpreting whole farm analysis, please contact us at the South Dakota Center for Farm/Ranch Management: 605-995-7191, firstname.lastname@example.org, or www.sdcfrm.com. Will Walter can be reached at email@example.com.