The 2008 crop is in the bin; time to stop, take a breath and re-evaluate essentially everything you do as you head into the new year.
With the turmoil in the economy, we're probably all plenty nervous about what's ahead. When the government throws out numbers like $700 billion to put a tourniquet on the banking industry, I can hardly grasp what that means. But then again, I'm always way off the mark when it comes to things like guessing how many jelly beans are ina gallon jar.
Still, this is no time to be paralyzed by uncertainty. It's a time to take a hard look at your operation and decide if there are ways to tighten the screws.
With high input costs, especially fertilizer and seed, you need to make sure every pound and kernel is being used wisely. Go to meetings. Evaluate new recommendations. Read farm magazines. Don't stand still.
Granted, lower oil prices could lower fertilizer prices. But lower oil prices could also reduce ethanol prices, which weaken demand for corn. So it's as important as ever to hone your management skills. It's never ending.
ON THE CREDIT FRONT, however, it's probably better news for rural America than on Wall Street.
To get a pulse on just how the credit situation will affect you, don't miss Susan Winsor's story, “Credit Catastrophe: The Long Road Ahead,” on page 6. She's talked to some of the big names in ag credit and gotten their take on how this mess will play out on the farm.
For example, Gary Schnitkey, University of Illinois farm management specialist, says, “I don't anticipate that farmers will have much problem with the credit side of things; most crop farmers are in pretty good financial shape.”
And from Mike Boehlje, Purdue ag economist, “Rural banks and the Farm Credit system haven't really participated in the subprime housing markets, so funds should be available, but at a higher cost.”
Our Profits columnists offer their advice on the financial credit front, too, starting on page 63. It's worth reading.
A BRIGHT SPOT for ag, however, is that during the good times the past few years, farmers did, indeed, pay down debt. USDA reports that on average, farmers have 91% equity in their farms and only 9% debt. According to an Iowa land ownership survey, 75% of the farmland there is owned without debt.
Obviously, the economy is not all doom and gloom for everyone. Agriculture is holding its own. Cargill just showed a 62% increase in earnings last quarter over the previous year.
So hold your own. Challenge yourself to perform better in 2009. Michael Swanson, Wells Fargo economist, puts it best: “If you're operating your farm the same way you did five years ago, you're falling behind.”