Iowa farmer Dave Hommel determines his costs, and then works to make sales to cover inputs and generate a reasonable profit. He's not one to wait on the next higher futures price tick.
Projected budgets for 2014 corn and soybean production are out – and they’re pretty scary. But Dave Hommel has faced tight years in the past. And a balanced offense with staggered small sales helps keep profits at levels he can live with.
Hommel runs a corn and soybean farm in north-central Iowa at Eldora. About 60% of the land is rented. His family also runs a farrow-to-finish hog operation. “Livestock is part of our risk-management plan,” he says. “We need diversity to spread out our cash flow. We raise enough corn to feed our hogs. And we use liquid manure from hogs as corn fertilizer.”
Corn yields average about 200 bushels per acre on the region’s prime ground. Soybeans yield 60-70 bushels. Beans are marketed through local and regional elevators. About 40% of the corn is run through the hog program. Hommel makes commercial corn sales on the remaining corn.
He handles his own marketing, a philosophy which works more times than not. “I like to make my own decisions,” he says, based on various newsletters and other media. “I don’t hit home runs, but I usually hit singles and doubles when I do it myself.”
Hommel takes a businesslike approach to risk management. He determines costs, then works to make sales to cover inputs and generate a reasonable profit. He’s not one to wait on the next higher futures price tick.
“We do a lot of budgeting,” he says. “I look at sample budgets from Iowa State, then tweak them with our own input costs. We break down our costs, sometimes on a per-field basis. Then we work backwards from there and try to fit all our sales over certain months of the year. That helps improve your cash flow and overall profits in most years.”
His hog manure saves about $100 per acre over commercial fertilizer cost, Hommel says. “And with corn prices expected to be lower next year, I don’t think it’s time to lock in 2014 additional nitrogen needs too early.”