Cost of production
With the ever changing times and with expenses now going up and down as fast as the prices for the crop, it is very important to lock in profits when you can. Buying inputs has become just like selling grain. You need to keep track of the cost of inputs and look at if they are a good deal or not keeping in mind that both have to be in line to make a profit. In the past inputs did not change a lot in price. You mainly know that at certain times of the year you may be able to buy them cheaper then you could at other times of the year. This has changed so it is important to at all times have a running sheet with your cost of production and what you need for a profit. This way if inputs are low you need to lock them in. As an example right now diesel fuel is about as low as it has been this year. If this price looks good to you and you can lock in a price, it may be the time to get the supply you need for the season. Again if we look at energy costs they can change a lot in a short time. We have also seen this with fertilizer this past year. Again if the price looks good now it may be the time to get it locked in.
In the past I have done a cost of production sheet for an area once a year. This year I have been doing one every couple of weeks and it can change widely in a two week period. So this year following cost of production is just as important as following the grain market and when you can lock both in and make a profit, it may be the year to do this when you cannot hold off until later. In the past some of the best marketing has been done in February or March. So keep your eyes open and take a profit when you can. If you would like more information on figuring your cost of production, give me a call anytime and we can talk about it.