New Decisions this Fall

September 2014

Hello to all our customers and friends,

     If you are lucky or perhaps blessed, you have received enough moisture to keep your crops growing and pastures green.  If the little showers missed you and the beans are hurting and the milo has curling leaves, you may be cutting silage in the corn field.  The wheat stubble advantage is evident this year as crops planted in it seem to be hanging on longer and showing less stress.  Grain prices have tumbled since wheat harvest for all crops on the expectation of a large corn and soybean fall harvest.  Over the next month I’ll be attending several meetings that will include segments of Ag marketing.  It will be interesting to see what they count as significant activities affecting the markets.  China’s stoppage of importing distiller grains from the U.S. collapsed that market to where the dry distiller’s price is now less per pound than milo or corn (and they are both cheap).  While this is not good for the milo, corn and soybean farmers, it is making for some inexpensive livestock feed.  Cheap feed including alfalfa is having a hard time competing with the cheap protein of the distillers.  It seems to also be encouraging more wheat acres to be planted this fall due to the higher input costs of traditional fall crops.

            What to do with the calf crop this fall is the first question.  The calf market is at an all-time high and with cheap grain the cost to grow calves to 750 lbs. or more would be less than they are selling for, so every pound of gain costing $.60 the producer could sell that pound for $2.15 for a net of $1.55.  Adding 150 lbs. of weight should net the cow man an additional $230/ hd.  However if in the weaning/growing process 1 or 2 head succumb to the stress you could lose the profit of 7 head.  High priced cattle change the dynamics of death lose. The old adage of a bird in the hand is worth two in the bush seems appropriate in this instance.

            Another decision that needs to be made is which farm program to enroll your operation in.  The Price Loss Coverage (PLC) or the Agricultural Risk Coverage (ARC) are both five year commitments that are tied to the land and therefore landlord or land owner approval or consent would be expected.  There are websites that have calculators for farmers to enter their specific information and anticipate what may be the best match for their operation.  All they need is a crystal ball to look five years into the future to put in the accurate information.  These programs have different limitations and calculations on planted or base acres and as such, are not five minute decisions. These are implemented at the FSA office, but if you are in the program that allows you to add Supplemental Coverage Option (SCO), you will need to purchase that from your crop insurance agent.  If you rent land from another landlord in the next five years you may be subject to a different program on those acres.  I have been exposed to these program meetings at least four times and am still trying to figure out if the recommendations change from meeting to meeting. 

Until next month.  Myron