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Put a pencil to 2013
Usset encourages growers “to put a pencil to 2013. You have a sense of fertilizer costs and, hopefully, other key variable costs (land rent, fuel, etc.). You have a futures market that tells you the value of the 2013 crop.
“What do these figures imply for your gross margin per bushel or per acre in 2013? I would not take action today if the figures indicated a breakeven scenario. I would take action on a portion of my crop if the figures indicated a large margin. It’s the burden of each producer to define a ‘large margin,’” Usset says.
Melvin Brees, University of Missouri agricultural economist, says 2013 planning can help growers begin paying their costs early. “It comes down to identifying profit margins and market signals in a variety of markets to identify price sales or targets for amounts that the grower is comfortable with,” he says.
DeLine needed the corn and bean price rallies before making any sales for the 2013 crops. “We’re definitely getting involved in 2013 with 10% of sales made in mid-July for corn, soybeans and wheat for next year,” he says. “We’re also looking at locking up some of our N, potash and DAP for 2013 in August. I think fertilizer prices are going to be much higher than anticipated, based on the fact that everyone will try to plant as much corn as possible with the high grain prices.”
He adds that good relationships with landlords, farm managers and consultants mean further expansion is possible. “My crop is in good hands because I have good farm managers and employees. My uncle, Smith DeLine, is not only a landlord in Missouri, but also advises me on crops in the Bootheel and southern Illinois. My father is also a landlord.
“As long as we can manage things efficiently and use economies of scale, we can purchase many of our inputs locally and provide good jobs for people. That puts money back into the community. All of those things are pluses.”