Making Sound Cropping Decisions

By Galynn Beer, Senior Sales Manager

Making planting decisions is a challenge. Weather uncertainty always exists and that alone can result in a conservative approach to inputs. Price fluctuations weigh in, as well. How many farmers actually calculate break-evens to help with marketing grain? I’m guessing a relatively low percentage.

Doing The Math

The quickest math to calculate, and probably the math that drives a lot of decisions is gross revenue. I’ve done it and so have most farmers. We intend to be more thorough, but that quick calculation will move us toward seeking information to support that quick decision. A little more analysis is beneficial and helps separate the intuitive, or emotional decision from a more thorough process.

Making Good Decisions

How do we make sound cropping decisions? Some of this has to be analyzed at the micro or individual level. Rental agreements, land costs, equipment costs and other expenses impact break-even prices. With annual crops, we have a great degree of latitude to change, but how does one decide between wheat, corn, soybeans, cotton, hemp, or other annuals? First, what crops can realistically be grown? It can be tempting to grow crops on the fringes of the growing geography and assume all will turn out.

One success story usually is over-generalized to become assumed success in all years. Big mistake. The world of statistics is littered with events that happen on each end of the ‘unlikely’ spectrum. It’s dangerous to make a change based on this. Probabilities for success need to be considered.

Next, where is the closest market . . . where can I turn my inventory into cash? Is it distant? Will freight charges erode the projected profits? And the buyer of my grain – where is his market? If it is far away, even an export market, he will likely protect that distance and risk by lowering what he’ll pay. Is the market for what you are growing big? Can it easily be over-done and create excess supply? Crops like quinoa can look attractive, but a swing of 100,000 acres is huge in a specialized crop. Consider these possibilities. Is the crop insurable in your area? If not, how will you protect your risk? Also, you have to consider the impact to capital. Don’t assume that your banker will agree with what you consider a good decision. Some crops are just more capital intensive, and a great deal of risk is accepted up front. It isn’t cheap to grow corn. Cotton takes a lot of trips across the field. If you don’t have capital to finish what you start, then the outcome will fall short of expectations.

Establish An Expected Value

It’s easy to evaluate an opportunity based on the best or worst outcome. We typically remember outlier events and not averages. 300 bu/acre corn, 5 bale cotton, 100 bu/acre soybeans, these results stand out. But averages are where decisions should be made. By looking at averages, we can establish an expected value. If 3 bale cotton at 60 cents a pound is a 10 year average and 220 bushel corn at $3.80 is also a 10 year average, now you can begin to make a decision. If we look at these normal yields, we can then calculate realistic break-evens and profit margins. If 3 bale cotton, with typical quality, will result in $150/acre and 200 bushel/acre corn will produce $100/acre profit, the decision seems clear. But here is where historical averages matter most. Optimum quality for cotton doesn’t always occur. There are likely years where yield is achieved, but quality isn’t and we don’t reach the profit per acre we expected. If quality and yields align to produce $150/acre profit 50% of the time, but 200 bushel corn produces the $100/acre 80% of the time, the winner, believe it or not, is corn.

How, for cryin’ out loud? 150 versus 100 is easy math; $150>$100 so the seemingly obvious winner is cotton. But this is about what profit we can typically expect, so $150/acre that happens 50% of the time produces an expected value of $75/acre while $100/acre occurring at a rate of 80% of the time produces an expected value of $80/acre. When you evaluate it this way, $80>$75 and corn wins. This is why consistency often wins out over the long haul. The more variables that need to come together to produce the profit you are evaluating, the lower the success rate. Protein in wheat, a certain size of potato, a certain timing for watermelons and strawberries to hit the market; these are all factors that can influence the realistic profit we can expect. But in fairness, if cotton produces $250/acre profit only 40% of the time, that’s still an expected value of $100/acre and would beat the $80/acre of corn. Cotton may not win as often, but when it does, it wins big. Just be realistic about yields, profits and percentages of wins.

Switching Costs

If you’ve never planted potatoes, or sugarbeets, or sesame, it’s unlikely the equipment you need is parked out back. You’ll have to buy it. Are you buying during a heavy conversion toward a crop? You’ll pay a higher price for the needed equipment because demand is elevated. If the market for the crop goes south, you’ll likely want to turn those assets into cash when everyone else does, resulting in reduced prices because of the supply of equipment. And some equipment is very specific, such as a cotton stripper. You can’t decide to harvest wheat with it. So how long do you need for the cost of switching to this crop and equipment to pay off? Markets don’t stay high forever and can influence how soon we thought we’d pay that piece of equipment off. So make sure to re-read the previous paragraph to decide if switching costs are worth it.

Cash

The last part of a decision we’ll discuss here is critical, and often overlooked . . . the impact to cash. If cotton hits $1/lb and you evaluate all of the above and decide it’s a good decision to plant cotton, sometimes we forget to think about the impact to our cash flow. If you are growing corn, you can choose to convert the grain inventory into cash as soon as you harvest it. Cotton is much more complex. Payment generally doesn’t start until after the cotton is ginned. That can be months after it is harvested. Then, generally there are marketing pools that pay the remainder out over several more months. So a simple switch can negatively impact cash flow. Capital that might be available in November of the current year with corn, may not totally be realized until November of the following year if you switch from corn to cotton. Depressed wheat prices can dissuade planting, and turn those acres into corn, cotton, or something else. However, wheat provides cash flow at a time when most other crops don’t. There may be a time when a lower profit might be a preferred choice because it creates cash flow at an important time. Also, there is the cash cycle to consider. If you plant cotton in May of one year and get your money in November of the following year, then your cash cycle, the time period from when money leaves your bank account until it returns, is 18 months. Corn planted in April and liquidated in November of the same year means your cash cycle is only seven months. A long cash cycle can result in periods of a cash crunch.

The other aspect of this is hidden for sure. Inflation, even if it is low, results in reducing the purchasing power of money. If you liquidate your inventory of corn in November of one year at a profit of $100/acre and get a profit of $100/acre back from cotton the following November, it is $100 in both scenarios and seems the same. But the $100 profit from cotton won’t have the buying power of the $100 profit from corn; time and inflation will have eroded the buying power of the $100 from cotton. The profit from cotton is much more likely to have a buying equivalent of $97 or $98 since the 12 months of inflation will have reduced its purchase power. This often goes unnoticed.

The Final Word

Don’t take crop decisions lightly. A lot of variables should be considered. Gross revenue and net profit are generally relied on, but there are other considerations that are important. We remember outlier events, but you should base decisions on averages, along with other impacts to the business. Seek advice from others. This can help to alleviate biases. But seeking someone who is convinced of the same decision as you won’t provide a different perspective. Try to find someone who will challenge your decision. Emotional decisions can be the enemy of long-term success. You owe it to yourself to be thorough.

Update from the Field – California

Southern California Crop Update from Dylan Rogers, Sales Account Manager

It’s Hot!

Southern California has experienced more than 25 days of 100+ degree-days. The heat has helped crops begin to catch up as they started summer on a cooler note. Looking specifically at table grapes, the early-season growers are already harvesting. Therefore, growers with a late-season variety should still be aware of their fertility program, specifically potassium in the program as they begin to get closer to harvest. Growers should also be looking for potential diseases or pests. One in particular to look for this year is powdery mildew, as that has been prevalent in some areas.

Switching to the tree nut side of things, almond growers should begin putting together their post-harvest crop nutrition program, as harvest will begin very soon and will ramp up quickly. This year there has been some naval orange worm pressure, so be on the lookout for that as well. Pistachio harvest should also be starting in the next 3 to 4 weeks.

We will have another Southern California Crop Update a bit later in the season. Until then, we hope that growers have a safe and successful harvest and look forward to their crop of 2020!

So, You’re Telling Me Agriculture Is Hard?

 

By Stephanie Zelinko, Sales Agronomy Manager

This year is reminding us exactly how challenging farming can be. In addition to the usual market fluctuations and other challenges we have come to expect, Mother Nature handed us a spring that will be remembered for a long time. The good news is, there are resources available to help make the best management decisions for your operation in any given year. One tool available to help with decisions is research data.

With over 25 years of scientific research completed at AgroLiquid’s North Central Research Station (NCRS), in addition to countless trials through contract researchers and grower field comparisons throughout the country, no other crop fertility product is more researched.

What can research data do for you?

1. Fine tune your fertility program

Soil testing is a great way to help develop a fertility program to help ensure an economical return. Having a soil test is the first step, but understanding the results is the more critical second step in the process. How do you know where or what to cut back on when you need to make economics-based decisions? Here is where research results come into play. That extra gallon of Pro-Germinator® may give you a few extra bushels, but maybe yield is “good enough” without it. The NCRS has results on rates studies of Pro-Germinator®, Sure-K®, Micro 500® and nitrogen to help make those decisions. Research helps determine the likelihood of return on the fertilizer dollar spent.

2. In-season applications can pay

In-season applications offer a lot of flexibility to a fertility management program. It provides opportunity to cut back or upgrade a fertility program, based on the season and current crop need. As weather and markets change, in-season applications allow for the chance to capture more yield if conditions are right. This includes applications such as additional Kalibrate® or AccesSat sidedress on corn, or a foliar application of Sure-K® and micronutrients on soybeans, wheat or fruits and vegetables. These in-season applications delay purchasing decisions later into the season, thus helping spread out cash flow.

3. Maximize return through proper timing

The 4R’s of nutrient management have embedded in our heads that the right timing of nutrients is necessary to achieve top yield and ensure what is being applied is available for the crop when it needs it. Before planting, at planting, in-season early or late are all good options, depending on crop and growing conditions. Split applications of nutrients, especially those that are at risk of environmental loss, have shown through research to improve yield. Fertilizer is expensive; knowing the best time to apply will help make sure the dollars spent go to the crop, rather than being lost or tied-up in the soil.

4. Embrace technology

AgroLiquid is a leader in innovation. This includes the products we manufacture and sell, and also keeping up with changes in liquid fertilizer application technology. Teaming with companies like 360 Yield Center® and Precision Planting®, we put these tools to the test at the NCRS, which helps our AgroLiquid representatives and field staff make better recommendations. Keeping up with the latest technologies in fertilizer application, along with which nutrients fit them best, helps ensure the crop nutrition is being applied in the best possible way to provide a positive return.

Just as there are many decisions to make when determining which crop is most profitable, there are many factors to consider when determining how a fertilizer budget should be spent. Utilizing research from AgroLiquid will help provide you some of the background and support needed to make a more informed choice. And this part of agriculture is easy…. AgroLiquid research results from the NCRS and other sites across the country can be found on our website at research.agroliquid.com.

What Does Winning Look Like For You?

By Stephanie Zelinko, Sales Agronomy Manager

When it comes to the end of a growing season there are many factors that go into determining if the year was a win. Some years, like the challenging 2018 season, just getting crops out of the field was a win. Unfortunately, Mother Nature is not something we can control. Every year for someone it’s too hot, too cold, too wet or too dry. There is no such thing as a “normal” growing season. There are however, many factors we can control. Crop nutrition and other crop inputs is one of these. Whether you know it or not, many of these decisions go back to what you consider winning.

What does winning look like for you? Here are three examples of different grower situations. Each take a little different approach in their fertility buying decisions, but they are all winners based upon how they measure success.

Yield

This grower wins if he has top yield. Being able win yield contest or earn bragging rights at the local coffee shop is the most important, top yield is the goal. Input costs and time are still important but not as critical.

To get top yields, crops can never be hungry for nutrients. If this is you, look at increasing your fertilizer rates and adding additional secondary or micronutrients into your fertility program. Spoon feeding fertility throughout the season is another great way to insure your crop has all the nutrients in needs. Foliar applications or adding other nutrients into your in-season nitrogen program have also proven beneficial.

Profit

To win in profit, this grower knows their economic return. They know what yield they can realistically achieve and make their buying decisions based upon their expected income. Yield is a very important piece, but only within spending limits. Every application is carefully planned and fits into their budget.

If you are looking for top profit you can be a little risky and spend the extra dollars if there is high probability to produce return in future. An economically planned fertilizer program which includes N, P, K and micronutrients is necessary. Your best bet is to understand your soils and crop needs and work with your AgroLiquid representative to best spend your fertilizer budget dollars.

Return

The grower that wins with return on investment looks for balance between budget and yield. Achieving top yield isn’t necessary as long as there is a good return on the dollars spend. These growers carefully weigh out every fertilizer input dollar and the potential return before making a buying decision. Often it’s less about dollars per acre and more focused on total dollars spent. Fertilizer is an investment, they expect to get their money back plus some.

If this is the category you fall into you need to do your homework. Looking at research to help determine the potential return on the dollars spent is a great start, AgroLiquid has years of data for you to review. There is little room for risky purchases here and using a soil test to develop the best fertilizer program will be key. In fact, careful planning with your AgroLiquid representative will help determine which nutrients are best to spend dollars on to increase the return on money invested.

It’s Personal – The Challenge

In recent years, a group from AgroLiquid’s research and sales teams have taken advantage of the North Central Research Station to conduct an economic challenge experiment. Each person developed a fertilizer program based on a soil test, with the goal of whatever they felt they would “win” the challenge. For this analysis only fertilizer costs and corn value were used in the final calculations. It is evident that each person had different views of winning which has influenced their fertilizer programs and results. This year grower Tim “won” by achieving top yield with 203 bu/A, but gave up some profit and had a lower return on investment. In comparison, grower Galynn had a slightly lower yield and improved their return, but won in profit with over $457/A gained.  Grower Stephanie had a good yield and was profitable but won on return on investment. For every dollar spent on fertilizer they received $4.50 in return. Three different growers, fertilizer programs and perceptions of winning. In hindsight, we should have established exactly what would constitute winning – because each of these growers is claiming bragging rights.

Every operation is different and the target for winning looks different for everyone. If you haven’t already, sit back and think about what winning looks like for you. Whatever it is, AgroLiquid has the products and the experts to move you closer to that target.

In-Season Fertilizer Applications

Splitting fertilizer applications can be an important aspect to a crop nutrition plan that is effective and economical. One in-season application option is sidedress fertilizer in corn. This usually means nitrogen, but sidedress is an excellent opportunity to provide other nutrients as well. You are already in the field and maybe there was something that was not applied during planting, like phosphorus. An experiment conducted at the NCRS looks at a field with only 7 ppm soil test phosphorus. We applied 5 gal/A of Pro-Germinator and 5 gal/A of Sure-K at planting (this is the maximum AgroLiquid fertilizer recommended for in-furrow placement). Putting an extra 2 gal/A of Pro-Germinator at sidedress along with the 35 gal/A of 28% UAN with eNhance provided an extra 13.4 Bu/A. This increase demonstrates again what an application of the missing link can do. Other nutrients were applied in other treatment plots without much of a yield increase. It is concluded that these other nutrients were not able to influence yield in the absence of adequate phosphorus. We are repeating this experiment in 2019 and are including Pro-Germinator plus some other nutrients to see if there is an additive effect.

Perennial Ryegrass Experiment

AgroLiquid also conducted an experiment in the Williamette Valley in Oregon on a perennial ryegrass seed production plot. This area is a leading producer of grass seed, growing 85% of perennial ryegrass used in the US and 40% of that seed used in the world. We worked with Precision Agriculture Research to conduct this experiment. One of the hazards of growing perennial ryegrass seed is that the grass gets tall and heavy with seed at the top resulting in lodging or falling over onto the ground before harvest. This makes harvest difficult as well as causes seed loss. To prevent this, a plant growth regulator called Palisade® EC was sprayed on at stem elongation. It shortens stem elongation, enabling better standability. We found that an addition of Sure-K along with the plant growth regulator can further improve standability and increase yield. The experiment showed the addition of Sure-K to the Palisade® application did improve standability and seed yield.

Sidedress can provide nutrients when the crop needs it. AgroLiquid experts can help you identify what your crop may need at that stage of growth, and how you can economically meet that need. Find an AgroLiquid representative near you!

 

Let the “Building” begin!

In the last blog for Carrington North Dakota we left off with the tanks installed in the new containment area of the building. The crew had put water in the bottom of the tanks for weight to hold them down so the North Dakota winds would not blow the tanks over before the building could be built. I am happy to say that Mother Nature was kind to us, this time! The first step to a new building is to have the proper design and engineering to withstand wind, snow, rain and bitter cold of the North Dakota environment. Engineering plays an important role when you have large open expanses with no support. Snow pack can become very heavy. When the building crew arrives on site they start by sorting the delivered material to make sure all the pieces are on site. Next they get a couple I-beam/columns set upright and bolted to the foundation wall. Then they bolt the open expansion roof beams together, crane them up and bolt them to the upright columns. If you look real close in the second picture below you can see  guide wires installed to help hold the top of the upright column in place.

building tanks

agriculture tanks

While the first few pieces were being put in place, workers on the ground were putting larger sections of the roof together. In the picture below you can see pieces of steel that span from one roof beam to the other, they are called purlins. The pieces that span between the wall upright columns are called girts. When you have a crew on the ground building sections and a crew up in the air things go together much faster.

constructing roof

load out area beams

Now it is time for the load out area! On the end of the beams there are plates with holes, they will be matched to the adjacent beams then bolted together. This is where a good crane operator is important.

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Now the end wall, which will help support the end roof beam.

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It’s starting to look like a building!

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  Now that all the girts and purlins are installed, it’s on to the siding. The weather an be a big factor when it comes to the installation of siding. Wind can be a big problem. Some of the sheets are 40′ long and they make a great sail, if you hold on tight. They began siding the west side first, which was a nice wind break for the south side. November is when North Dakota gets a lot of wind out of the north west, when this happens cold weather is not far behind.

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While the siding was being installed the overhead door installers were next on the list to get the building closed in.

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The crew was finally able to install the roof panels after a couple days of high winds.

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This is where we will leave it for now. The rest is trim work, finish grading and the new Agroliquid  building sign. Stay tuned!

 

LIVE FROM THE NCRS: Farming Big Time at the NCRS

So planting at the NCRS is in high gear now.  It’s still pretty cool in the air and soil, but warmer weather is coming.  Yesterday Brian and Jacob planted potatoes for the fertilizer tests on that important crop.

planting potatoes

 One of the new farms had some trees cleared and it was finally dry enough to have them hauled away.  No more planting through the woods. 

clearing trees for farms

Here is Phil applying herbicide after a corn experiment was planted.  Having gps guidance makes this so much easier, and more accurate, than the days of foam markers.  The boom covers 45 feet or three plots per pass, which is plenty for our tests.

applying corn herbicide

Over on Farm 12, Stephanie and Tim had a visitor.  Troy dropped by to check progress.  He gets antsy if planters aren’t planting when the weather is nice.  And he found his “antsy” alert was a false alarm.

planting field

 After getting loaded with another treatment, Tim makes another round.  Repeat till done.  Then move on to another test.

herbicide on field

I will give an unsolicited plug to one of our equipment suppliers.  We use Ag Xcel’s GX2 Tower Pump System on our Monosem planter.  It is the most accurate and trouble-free pump system that we have ever seen. Each row applies exactly the same amount of fertilizer over a range of rates used in our tests.  In our work, accuracy is the key, and this does a great job.  It is a little spendy, but is well worth it, especially considering the cost of inconsistent output and downtime.

Ag Xcel's GX2 Tower Pump System

So we hope the nice weather holds for awhile to get further ahead.  More reports to come.

Troy Bancroft Joins Darren Hefty on RFDTV

AgroLiquid CEO and founding member of the Responsible Nutrient Management Foundation Troy Bancroft, alongside PNC Bank’s Warren Graeff, joins Ag PHD. host Darren Hefty on RFD-TV for a special segment on the work RNMF is doing to foster sustainable agricultural practices. The segment was filmed inside AgroLiquid’s IQHub, a 9,500 square-foot center for agricultural history, innovation and exploration in late 2014.

Bancroft serves as President of RNMF, a foundation that has been working to elevate the discussion around sustainable agriculture practices. More information about RNMF can be found on the organization’s website.