Producer Page: Harvest hustle

Harvest Hustle--- Once again, the fall work is almost upon us. We can count our blessings for what looks like a pretty good crop at excellent prices. Best of luck and remember to work safely!

Safety Signs--- Speaking of safety….harvest is the most dangerous time of the year on the farm. Here is a list of a few items to consider:

  1. Replace/repair all missing PTO and auger shields.
  2. Shut off tractor/auger before leaving cab or inspecting equipment.
  3. Check and update flashers, lights and reflectors on vehicles and wagons.
  4. Have working fire extinguishers near grain dryers and combines.
  5. Don’t enter a bin unless power is locked out and another person is present.
  6. Don’t have kids take on jobs that they aren’t ready to handle.
  7. Also know where young kids are and teach them to stay away from danger.
  8. Take scheduled breaks. Fatigue clouds judgement. Get sleep, eat healthy.
  9. Look up….be aware of power lines when moving augers etc.
  10. Have a communication plan. Let people know where you are and check on others while working.

Estate Excuses--- Although none of us wants to consider this issue, it is imperative that you do. Higher land values may dramatically impact your estate valuation! You need to consider both the federal and state estate tax rules. Meet with a competent attorney to discuss a plan that fits your family’s needs. And be sure to discuss this with your children, siblings etc. I’m sure you can all think of sad stories about bitter family fights over money when Mom and Dad pass away. Communication early on can avoid unrealistic expectations and misunderstandings later on.

Fertilizer Fundamentals--- The high prices of fertilizer should lead to a careful consideration of applications this fall and next spring. Work closely with your agronomist and review the recommendations from University of Minnesota and/or Iowa State for our area. You may be able to reduce application of some elements without sacrificing yield in some areas if you have a comprehensive soil testing program that indicates high nutrient levels. You need to think about profit break-even and the likelihood of yield response from fertilizer applied at different test values.   You need to think about agronomy and economics.

Downturn Duties?--- We have had a couple of great years on the farm in our area. But we should expect that sooner or later the cycle will turn. What should you do to get ready for that while you are enjoying the current profits?

  1. Grow your working capital (current assets over current debts). Having cash enables you to absorb revenue declines and reduces some short-term borrowing costs. You may also find opportunities in a downturn to acquire assets or inputs at a value.
  2. Margin management---sharply focus on production costs and breakeven calculations. This can change quickly when commodity prices drop, so it is vital to know where you are at and what you can afford.
  3. Position your liabilities. Reduce debt with profits, and consider locking in interest costs where appropriate on longer term debt. Pay attention to your cash flow projection and make sure it can withstand a shock of higher interest cost and/or lower revenue.
  4. Be thoughtful about growth and capital purchases. You may be paying off that new purchase in a lower profit environment.

 

Take Care,

Mark