Farm Horizons, April 2016
Be better and farm the best
By Myron Oftedahl
Micheal Swanson, Ag Economist for Wells Fargo, has a saying, “Farm the best and leave the rest.”
Another quote along this line is from David Kohl, “You have to be better before you can be bigger.”
Being better means getting education, and understanding how decisions impact other things in your operation. Being better means to have accurate enough records so that you know what is the best.
Do you know which fields or farms make you money year-in and year-out? Do you have an enterprise on your farm that is continuously subsidized?
It can be a hard decision to get rid of an enterprise that has been a part of the operation for generations. I know of one farmer who couldn’t stand to see the investment that he had made, and that was not being used, after he sold his cows, so about 1.5 years later he bought a herd of cows back. He did sell those cows after a couple of years, and then could see some alternate uses for some of the structures.
Let’s dig into those two statements further, what does it mean to farm the best?
We all have land that is never our highest-yielding, but is it more profitable than others?
The point that Swanson makes is that you cannot pay the same amount of rent for poorer or marginal land. An acre is not equal to an acre in many cases.
I had a college professor use the quote, “Productive land is always fertile, but fertile land is not always productive.”
There is a lot of truth to that statement; some of the most fertile land in the US and other countries is the river bottom land where flooding deposits the silt carried from other areas that silt carries a lot of nutrients with it. The problem is that it is not always farmable, due to flooding or other issues.
We see the same thing here, the land may be fertile, but due to poor drainage, it is difficult to farm. The good part of that is that it is easier to add drainage than it is to stop flooding.
Now let’s look at that statement by Kohl, “You need to be better before getting bigger.” You need to know the financials for your farm, you need to understand what impacts them. You need to be able to make decisions.
If you are not a timely operator on a couple of hundred acres, how can you expect to be timely on 500 acres? Milking 60 cows and getting 50 pounds per day of milk is not going to give you a production per cow increase by milking 90. You need to be on top of the production issues before you increase the size of the operation.
How can we become better? How do we farm the best? You need to start by making informed decisions.
A good way to make informed decisions is to commit time, energy, and money to attend seminars, meetings, and classes, so that you have more information. Another is to seek advice and input from other sources.
Being a lifelong learner comes in handy as a farm business owner, because of all the things that we should know. Think for a minute, how many occupations that you cover as a farm business owner accountant, marketing, veterinarian, herdsman, agronomist, machine operator, mechanic, truck driver, regulation and verification, human resources, soil scientist, nutritionist, tech support, and many others.
Are you as knowledgeable and up-to-date as the people who have one of those single occupations as their profession?
Another way is to have accurate data or records. Yield records, production costs, budgets, enterprise analysis, soil tests, feed tests and rations, and maintenance records are all examples.
Let me give you an example; if you had attended some seminars and classes, you would have an understanding of a soil test and how it relates to a fertilizer recommendation. You would know the difference between a soil-build recommendation, a crop-yield recommendation, and a crop-removal recommendation. All should give you a respectable yield, providing all of the other pieces of the puzzle are in place.
Your decision should be based on the economics of the crop. Can you afford to do a build program in a year with a high price of $3.50 for a bushel of corn? Would one of the other recommendations fit the budget better? Which of the three would have less potential impact on the environment? What could you do to make more efficient use of fertilizer dollars?
You, as the business owner, are responsible for your farming operation. Yes, Mother Nature throws us some curve balls once in a while and makes things difficult, but if you have some knowledge or experience or both ( yes experience counts as knowledge), you can decide on an alternative course of action.
Use your suppliers, friends, extension, and FBM instructor for information and recommendations, but you have the ultimate decision. You have to sort through those recommendations and advice and decide if it fits your farming operation, and if it fits your budget.
Whenever I look at budgets or I look at the Finpack database, and no matter how many times I hear that we need to control costs and be more efficient, profitability always comes back to production. The farms in the top 20 percent always have more bushels, more pounds of milk, more pigs per litter, etc.
You achieve production by being a student of that enterprise. You are among the cows, pigs, corn plants, soybean plants daily, observing how they are growing, watching for any signs of stress, whether it be disease, weed pressure, water stress, or anything else. This allows you to be timely with your response to the stress that is affecting production. Anything that does not promote production is a stress. You, as a farm business owner, are in charge of controlling stress.
I could take a field, split it in half, use the same seed, fertilizer, chemical inputs, and machinery, and have two very different yields, just because of timeliness.
I think that we all know that there is a yield penalty for planting late, that there is a yield penalty for spraying late. By applying the fertilizer differently we can take advantage of some efficiencies of placement and timing that will move us to higher yields. Better soil tilth and preventing compaction will also help. Getting the combine set correctly is also a big part of the process, are you controlling the harvest loss?
These are some examples of getting better before getting bigger. These are some ways that you can farm the best and leave the rest. Be profitable.