What is in this article?:
- 7 Tips for Corn, Soybean Marketing During a Drought
- Use Options
- Insurance, Margins, Alternatives
Insurance, Margins, Alternatives
4. Crop insurance. Be certain to complete all record keeping and paperwork in a timely manner for crop insurance. Mark explains that while premiums for fall-harvested drops were to be due earlier than usual this year, USDA has worked with crop insurance companies to delay those earlier payments by 30 days.
"Be certain to pay premiums on time and talk to your crop insurance agent before cutting, chopping, haying or abandoning an insured crop," Mark says. "For harvested grain, be certain to understand and follow record keeping requirements set forth by your crop insurance company and agent."
5. Evaluate new alternatives. Many drought-stressed grain and livestock producers are in difficult positions this year, but may be able to help each other. For crop producers without cattle, consider the economics of selling drought-stressed corn to livestock feeders for silage or hay. While there are several nutritional safety aspects to this, Mark says it might be beneficial to both parties in some cases. Kansas State University has an excellent calculator to estimate the silage value of corn and sorghum for both sellers and buyers, available at www.agmanager.info.
6. Manage 2013 margins. High grain prices for 2013 and beyond are enticing sales of next year's expected production. Mark says making small sales of insured bushels at this point might be a good marketing decision. However he says that producers should keep in mind that most of the input costs for the 2013 crop are not yet known.
"Should input costs spike higher, expected profit margins at current 2013 price levels may turn out much lower than expected," he says. "This occurred a few years ago when prices reached then all-time highs. Margin management will likely be most effective when grain sales are timed with input purchases in dollar-for-dollar amounts."
7. Doing nothing is a decision. "In historic times as these, it is easy to suffer from 'analysis paralysis' and not make decisions or take actions," Mark says. "The challenges of this year's drought could cause some to avoid making decisions regarding grain sales or herd liquidation. Often, the advantage goes to the producers that make the difficult decisions first – before production conditions worsen further or prices become more unfavorable. Still, sometimes the best decision is to wait for a certain time or event to occur, just be sure that too is a conscious management decision."
While every farm-management and marketing decision needs to be carefully evaluated, Mark says it is important to actually implement the plan once it is developed.
"Be certain to communicate openly with family members, employees, lenders, brokers and other members of the management team while doing both," Mark says.
To learn more and hear an archived recording of this iGrow Radio Network interview, visit iGrow.org.