Mindset

Be Confident in your 2013 Profitability!

Empty Grain Bins but Not Empty Pockets
If you are like me, you probably experience a degree of natural fear when exposed to heights, especially if there is little or no protection. After more than 30 years on the farm, I look no farther than the grain bin for this glaring example. In the fall, as harvest preparation is occurring, the one job that I hate doing is opening up the lids on the grain bins in preparation of filling them. Grain bins on our family farm have always been used to gauge how successful the crop year was. The hope was always to have more grain than storage because that would be a sign that the year was a success.

Over the last 2 years, we have begun to look at the grain bins in a different manner. With the challenges that have been faced in many regions, sub-par crops have led to empty grain bins. While the Corn Belt has produced 3 sub-par crops relative to the trend, on-farm incomes have continued to increase; even in the face of having grain bins that were short from being full. The one key component in this has been risk
management strategies that growers have utilized to protect revenue on their farms.

There are many ways that your crop insurance policies can work for you. The key in getting policies to work for you and your farm starts with how you look at using them. Most think about crop insurance only as a tool to protect income if the crop is damaged. We saw a significant need for crop insurance to serve in that role this past season. Some also rely on crop insurance as a way to protect from fluctuating market prices. How do you work marketing into this? Crop insurance allows you to market your crop to your level of coverage and take advantage of pricing opportunities that come before the bins are filled. The key component in doing this is to know your long term break evens. This number includes not only production costs, but short and long term debt, family living expenses, and profit. When you know your break even with profit built in at the levels you have insured your crop, it’s easy to be proactive with your marketing plan and take the emotion out of pricing your bushels.
In 2013, the greatest return on investment could very well be your election of policies for your farm. The decisions are not easy and must be tailored to your operation as they can equate to hundreds of thousands of dollars, both gained and lost. Do you have a risk management strategy for this growing season and are you going to use the tools before you fill your grain bins for 2013 prior to planting the crop? With the proper use of MPCI (Multi-Peril Crop Insurance) and additional specialty products, this year will be a great year for your operation. As MPCI is about to set its base revenue for the season, we will most likely have the opportunity to guarantee a break-even, or possibly a

marginal profit for your operation. In our diagram we picture a grain bin. If estimating break-even to be around $850/ac, with an average APH yield of 180bu/ac, the marketing break-even would be $4.72/bu. Dec. 2013 corn is trading around $5.75/bu., over a dollar per bushel profitability. What level of insurance are you thinking of taking to guarantee yourself a profitable year?
Historically, we purchase MPCI in March and do not think about it until after harvest and say to ourselves, “I’m sure glad we didn’t need that product again.” When I look at the last 20 years, the all-time high spring price was $6.01 in 2011, followed by $5.68 in 2012. Assuming our markets hold in the $5.75 range, we are able to assure a profit for your farm. In these same 20 years, 70% of the time the market price is lower by fall. With the revenue protection product, we are guaranteed a set revenue price so our down side risk is minimized.
The crop insurance deadline is fast approaching, with only a little over a month before the March 15th deadline. Farmers across the Corn Belt are still dealing with the emotions from last year’s harvest and growing season. We know that 2012 was a tough year, one that we can hopefully reminisce about in the future and not see repeated. At Corn Capital Innovations, our main concern for farmers is this: get your crop insurance set up so that you know what your bottom line protection is. Also, make sure you know what your protected bushels per acre are, and then you will know what your guarantees are. This will all result in the fact that if or when there is a market rally, you can act on it and not have to worry about overselling your guaranteed bushels versus your yield expectations.
Here at CCI, we take a look at the revenue products that are available and slot them into a policy selection matrix to make sure that we’re making the best recommendation for your operation. The policy section matrix is a tool developed by Water Street Solutions to provide the best risk management plan for your operation. We do realize that each operation is different in terms of complexity. That is why we are excited to sit down with each operation and determine an individualized risk management plan that will access what unit structure to take, what coverage levels to take, and what other products are available and should be considered for your overall risk.

Top Questions and Concerns About Crop Insurance and the Answers You Need

Every year around this time we review and plan our crop insurance needs for the March 15th deadline.  It’s important to know and understand how history, trends and other factors can influence the planning process.    Here are a few of the top questions and concerns you may be asking as you prepare for 2013.

Questions that are arising from 2012:

  1. What will the drought with the high number of payouts do to my premiums?

Crop insurance is not the same as auto insurance and claims paid out will not automatically raise your premium.  It is county and state rated over a 25-year period.  In fact expect 2013 to be about the same as 2012 or it may even decrease slightly

  1. How will the Farm Bill and Government affect insurance?

By January 1st the bill was already intact so no changes are expected.  In fact expect it to be intact until 2014.

Seasonal Market Trends

Trends follow three peaks: Spring, Summer and Fall.  “Crop year 2013 is like 2012 on steroids” says Deb with Water Street Solutions (LINK).  “No two years are alike, even if you have the same weather, you will not get the same results (agronomically speaking).”  What influences markets?

  • SPRING = Acres in the ground, supply and demand, conditions
  • SUMMER = Heat stress, weather, drought
  • FALL = Price drops or price increases

Crop Insurance – Crop Protection

You will need to decide how many bushels you are willing to invest, to insure your entire crop.

Options:

  • Revenue Protection
  • Production Protection
  • Named Peril Insurance, more than just hail coverage it can include fire, lightning, vandalism etc.
  • Add endorsement to cover additional, such as green bend or green crimp & greensnap with extra harvest expense

When we are going into a higher commodity price in the Spring, we recommend higher coverage.  We would welcome the opportunity to sit with you individually and base your coverage on your specific farm and your needs.

Don’t forget the deadline is March 15th so give us a call today at 320-523-2252 and we can help you get the protection you need for your peace of mind.

Is Your Tackle Box Full?

With below freezing temperatures and a fresh blanket of snow it must be ice fishing season. Time to put on the long underwear, Kick on your boots, pull down your stocking hat, and grab your fishing rod and bait.  Ice fishing is a lot like farming.  Every year there are new tools and technologies that come out to make your time spent fishing, or farming more productive.  Every year brings great anticipation in where and when the fish will be biting, but one thing is always certain, year after year it’s never the same.  To be an exceptional ice fisherman or woman you need to have several lures in your tackle box.  Similar to farming, you need to be willing to change when something is not working. I’m Jim Dumdei with Corn Capital Innovations and we are here to bring the right lures to your operation, from production to crop insurance, or grain marketing to financial analysis, we will make sure your tackle box is fully loaded to help you land that big one you always hear about. See you on the ice!

Get the latest fishing report here!

Follow us on Facebook and Twitter to get the latest reports throughout the season along with our own fun fishing photos!

2012 Observations from the Combine

When the 2012 crop year started last fall, there were many challenges that were facing the crop 6-8 months before it was even planted.  Most of the challenges were derived from the weather or lack of weather specific to rain.  There were many changes made to tillage programs last fall in dealing with ground that was less than ideal for preparing for the 2012 crop.  Farmers were up to the challenge to prepare an environment in each field that would give them the best chance at producing their best crop for 2012.  Last winter we spoke of how climate is what we expect, weather is what we get, and the environment is what we make of it.  While there are numerous examples of what weather did to your 2012 crop, I will focus specifically on the environment of each field.  I will also discuss how different management practices altered the environment to attain results that lessened the impacts of incremental weather events.

1.  Changes made during fall tillage (or the lack of changes) had a large effect on soil conditions at planting.
Keep the clods out of the field and keep the residue high and sized.  Fall tillage scenarios in which growers adjusted their equipment to work shallower than normal to keep the soil structure intact kept the ground level while sizing residue, as well as, fracturing the soil to keep the rough clods at bay.  By keeping the soil profile intact, the planter was able to plant the crop into a very level seed bed.  The residue remained high for the row cleaners to do their job on the planter as well.  Even the slightest amount of residue in the seed trench this year caused delayed emergence do the environmental factor of taking a soil profile void of moisture and putting air (residue) next to the seed.

2. Planting date was once again irrelevant.
The old adage of planting early to obtain high yields was once again not seen as we rode machines this fall.  Yes, sometime planting early can be advantageous, but top growers always keep in mind that it is the soil conditions at planting time that are the most important factor to producing a top crop, not planting date.

3.  Establishing a high ear count was not a challenge due to ideal planting conditions, keeping a high ear count from adverse weather was the #1 challenge that was faced this year.
As stated above, the planting date was irrelevant to final yields.  What was relevant was the action taken by growers who faced weather perils early in the year.  The effect of a pounding rain on emergence was seen across a wide area.  Those that took action and utilized a rotary hoe to help get as many full ears out of the ground were paid huge dividends on final yields.  Those that took action in mid-May as the country side turned black with dust from high winds to keep their crop from being set back by sandblasting had a better chance at producing greater yields than those that did nothing.

4.  The effects of early season nitrogen applications, as well as, starter fertilizer provided an environment that alleviated stress going into pollination.
In fields where both were applied, the kernel set was outstanding.  The plants demand for nitrogen and phosphorus at pollination are at their greatest need.  Making sure the plant was fed correctly early in the growing season helped establish a root system that could handle the stresses that were endured during pollination when the plants focus turns to a reproductive state.

5.  The focus on bushels per thousand plants instead of plant populations tells the tale of how management and weather affected this years crop.
On average (whatever average is) a corn plant will produce approximately 6 Bu per thousand plants.  What we saw on combines was a wide variance in what the final number was.  We saw ranges of 4 bushel per thousand to 7.25 bushels per thousand across all varieties and fields this year.  What were the key factors in producing such a wide difference in the outcome of these yields?  The obvious answer is weather.  Whether it was early pounding rains or areas where we went 8 weeks without rain, in some instances both were the case for the same field.  While the water or lack of water played a role, the differences emerged in how the ground was set up last fall, how well it was planted, and the mindset of the grower to focus on the right agronomic differences to provide a different outcome in the face of the same weather.  In areas where wind events caused the lodging or flattening of the crop, we saw what the loss of the photosynthetic factory did in reducing the plants ability to fill the cob, thus reducing the bushels per thousand plants.  Keeping in mind that these wind events affected the healthiest, most robust, plants in the field, thus they were more susceptible to catching the wind with greater foliage.  When the plant did go down, the final yields were almost based entirely on how well the plant was fed to the specific event when the plant stopped worrying about filling and turned its focus onto making grain that was already on the cob.

6. Drainage matters.
We asked our growers to rank the soil condition at planting, and most of our growers ranked their soil conditions an 8 or 9 on average.  What we saw after planting was the adverse way that water, depending on the amount and location in a field, can do to variability in the outcome of the yield.  We all know that drainage always pays for itself by way of improving soil conditions at planting, thus equating to even emergence and improved utilization of nutrients in the plant throughout the remainder of the growing season.  My hypothesis of the low ground yielding higher this year, in large part due to the lack of water from June through August was quickly proven otherwise on the combines this fall.  Even with the same ear count, there were great differences in yields within the field based off of early season water and drainage.  Where the water was utilized and drained, the plants ability to get its roots down and continue to search for moisture and nutrients pre-pollination were extremely important.  In the poorly drained sections of the field, a shovel quickly provided insight as to how lazy the roots got early in the growing season.  Also, when they entered the pollination phase, they had little to nothing to overcome the stress and needs of the plant.  Keeping in mind that the plants energy at pollination to fill goes into producing kernels, not roots!

7.  Fungicide and foliar nutrients during pollination eliminated undue stress on the plant.
The stress that was seen and observed on the combines was the plants ability to handle heat stress. Even the smallest amount of rainfall after pollination equated to large differences in the cooling of the canopy.  The crops roots are their radiator, we all know what happens when a radiator runs with no water in it.  The plants roots simply could not keep up with the demands of the environmental factors stressing the plant.  By giving the plant a steroid shot, we gained the ability to keep the plant thinking it needs to stay alive and continue to fill in hopes of getting rain to let the roots go back to work.  Keeping corn plants alive longer is vital due to the structure of how a corn plant works.  Corn is an indeterminate plant.  When it senses bad things are going to happen, or death, it focuses all its energy on maturing the kernels it has for reproduction.  The corn plant does not care how many kernels it has to reproduce, it only wants to reproduce.  What we want is the corn plant to produce as many kernels as possible as that is how we get paid.  By spraying the crop at pollination, it came down to a battle of attrition of our wants to keep the plant alive versus the plants wants to die.  Many people had questions as to why the beans performed so well in a dry year.  The simple answer is in the structure of the bean plant itself.  Beans are a determinate plant.  The bean plant will shut down almost to the point of death in the face of stress waiting for better times to add flowers, pods, and ultimately beans.  We get several chances for the bean to reproduce more flowers to produce more yields, whereas the corn plant only flowers once.  The beans waited and waited and finally got what they needed in late July to ultimately determine their final yields.  This was especially true where fungicide was applied; it simply allowed the plant more time to focus on reproduction.  If you think about why and when fungicides and foliar nutrients were applied this year, it was when the plants were stressed and did not have the abilities to get what they needed from their roots.  Whether it was at the V4-V6 stage early in the corn crop, or during pollination in the beans and corn, the plants demands for nutrients were not being met so we had to supplement with foliar applications.

8. Early harvest pays large dividends.
It happened again.  Two years in a row where a rapid dry down has occurred.  One thing that needs to be noted for future years is that in “stress” years corn needs to be harvested in a timely manner.  The timeliness of harvest equated to large differences in yields.  As every day passed this fall, Mother Nature was doing her best to steal as much yield away from us as possible.  In my years of riding combines I have yet to hear a grower say I wish I would have waited to start combining.

9. Success was based on the mindset of the grower.
Even in years when yield goals may not be achieved, the successes, no matter how big or small, are based on the mindset of the grower.  Having the right attitude at planting and maintaining the same problem solving positivity throughout the growing season has and always will equate to greater separation in yields.  The mindset starts with 3-5 year yield goals that are then broken down onto a field by field basis.  Once the crop plan is developed and in place, the yield building systems begin to take shape.  These systems keep all in the operation moving towards the goal of increasing yields, no matter what interference can happen during the growing season.  When you deviate from the crop plan, it can turn into a crisis management plan and that simply never works.

Farming Profitability is like taking Vitamins vs Aspirin

Vitamins are used to ensure adequate nutrients and taken daily will ensure overall health for years to come.  While aspirin is used as an analgesic (painkiller) to relieve minor aches and pains temporarily.

With the New Year just around the corner, resolutions and goal setting traditions are coming fast.  Have you thought about what you want to accomplish in 2013? Have you set a goal to lose weight (the quick fix- aspirin) or to set a goal of overall health (long term – vitamin).

Today is the day to start looking at the things that are going to make a small difference over the years to come; like taking vitamins for overall health.   If you need to take aspirin, it may be solving the short term problem, but you will probably have to keep addressing the same issue.

Any good health plan can apply to your farm operation as well!  As you design and/or reanalyze your operation’s business plan for next year, using the right tools can make all the difference. If you are spending a lot of time being reactive and addressing many issues that came up last year, it’s time to look at things that you can do in 2013 to be proactive and incorporate pieces to your farm that contribute to the overall health, instead of just feeding the “pains” of the operation.

If the goal is to have a “healthy” operation, start giving it vitamins today to reduce having to use aspirin later in the year.

Vitamins can include:

It’s when you don’t have these things in place that you will find yourself needing to take more aspirin; that ends up being a reactive approach and ultimately can hurt your operation. When we have the right things in place from the beginning and maintain them through the year (acting as vitamins), we have less “illnesses” that strike from year to year. For most of us, big goals are overwhelming, so sit down and consider the easy mini-steps that you can take to get to where you want to be.

When we take the vitamin approach, we are able to have a more consistent operation with steady growth; which in turn, makes the long term goals for our operation more attainable. Once we start reaching those small milestones, we get much closer to that ideal big picture we are reaching for.

Sure there will be times that we may need a little aspirin; we just don’t want to rely on it on a regular basis.

Do you have ways to stay your “healthiest, most profitable” throughout the year not mentioned above?  Tell usin the comments below!

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