Five Tips for a Better 2020 Crop Year

It’s hard to believe we’ve turned the page on 2019. Maybe you’re reviewing what went well (or what you could improve upon) and are making plans to step up your game in 2020.

There’s a lot of wisdom in experience. In that spirit, we’re bringing you highlights from some of our best episodes of In the Driver’s Seat. Our podcast on farm financial management turns two years old this month and in our 25 episodes we’ve brought you some of the top professionals in agriculture.

Some of their points are worth repeating, so here’s a round-up of tips that are still relevant in today’s farming environment:

Here are a few of the professionals we’ve featured and their best tips and guidance:

Tip #1: Go for “a little bit better” by using specialists.

From Dr. David Kohl, Ag Economist, Virginia State University
“What separates successful farmers today? They focus on being just 5% better in key areas. On the crop side, that means producing 5 to 10 bushels more an acre and holding costs under control. It’s getting a few extra cents per bushel in marketing. And the real key is capital efficiency—getting the most out of land, equipment, machinery, and labor. An operation I saw in Nebraska had one owner focused on marketing, working with an advisory service as a coach. Another was good at machinery maintenance. A third did the strategic planning. By being interdependent and a little bit better in all these areas, they lowered their fixed costs by 30%.”

Tip #2: Once you make a plan, execute it.

From Kevin Van Trump, Market Analyst and President of Farm Direction
“If we jump back to $4.10 or $4.20 corn, what will happen? We become the most bullish when we start to peak and that’s when guys tend to move their goal posts. Come up with a game plan knowing your break-even as best you can, and try and execute to reduce your risk. When the market is over-supplied like it is right now, it’s trying to find the high-cost producer, single him out, and get him out of the business. So you have to be trying to get singles. There’s too many farmers trying to hit home runs. You have to be very conservative, have a smart game plan, and focus on the execution side. It’s the execution that kills us.”

Tip #3: Reduce input costs by buying direct.

From Jake Niederer, Director, ADM Farm Direct Fertilizer
“We’re trying to streamline how that fertilizer is bought and delivered to your farm so we’re not increasing the costs at 15 stops along the way. The other reason we call ourselves “Farm Direct Fertilizer” is more communication with the grower. The public financial statements of typical companies in this space show fertilizer mark-ups are massive. There’s not been transparency about when is the right time to buy or why. So we try to provide information to help a grower make better decisions. There’ll still be volatility in the market. But hopefully with information tools we’re providing, we help eliminate some of that volatility and make it a better buy.”

Tip #4: Discipline yourself with offers.

From Matt Bennett, Illinois farmer, speaker, and consultant
“You can do offers with your hedging account or just simply call your grain elevator. This is a very fast, volatile market at times, but we don’t have to try to catch the cat by the tail. With offers, we’ve got a trap in place. Do some homework and put your offer in where you can make money, first of all. Second, don’t pull the offer! How many times will guys say, ‘I’d like to sell beans at $10,’ but when it gets to $9.96, they hear some clown on the radio saying we’re going to $10.25 and they don’t want to sell anymore. We put that offer in for a good reason, so let’s not let greed take over. Leave the offer in place, let it execute, and you’ll have more bushels to sell later.”

Tip #5: Keep emotions in check.

From Nate Brabec, ADM Origination Manager, Nebraska
“Loss aversion is a strong emotion that can trip us up. It says the pain we feel from a loss is two times as intense as the good feelings we get from a win. For example, the market in 2012 was a $1.50 higher at harvest than before planting, but the reverse has happened seven years in a row since then. Farmers still tend to be a lot more concerned about prices going up during the crop year than they are about prices going down. As a result, they’ve missed out on the wins of pre-harvest marketing every year since. We have to do the math and watch out for these fallacies.”