An old definition I remember from high school was is for the word “luck.” Luck is “where preparation meets opportunity.” For some it may be difficult to see the opportunities that lie ahead in agriculture, particularly as we look back to the events of Sept. 11.
Certainly, it's easier to concentrate, and most people do, on the negatives of every situation. Just stop in at most coffee shops and turn on a recorder and you can store up a lifetime of negatives. The “ain't it awful” syndrome still dominates a lot of people's lives. That's unfortunate, because there are so many good things to look at.
So what can be positive in this mess, some of you might ask? To begin with, consider the following:
Corn and soybean yields turned out higher for almost every reader of this magazine than expected two months prior to harvest. Sure, some of you did not have record yields, but many of you did. Even in areas of southern Minnesota and northern Iowa, where it was assumed by some that the crop was lost, somehow God granted many people yields beyond their wildest dreams.
Farm incomes will likely be the second highest in history. Combine high yields with large loan deficiency payments (LDPs), and many people will be surprised with the large cash inflow.
For those who have played their cards right this past year, net worth is increasing considerably. Even with all the negative news, farmland values are up almost everywhere.
There is, however, a black cloud in all of this good news. I looked back at some of my old Soybean Digest articles and found one I wrote in 1999 discussing the huge separation in farm incomes. I discussed how the trend was accelerating and would continue to accelerate in years ahead. It's a trend that's happening fast.
The old 80/20 rule is in effect. Twenty percent of the farmers are making the majority of the money, and the other 80% are complaining about how they're doing it. Some people still can't figure out how their neighbors are buying new tractors and bidding up farmland and cash rents when corn is under $2/bu and soybeans are at $4.
The answer, of course, lies in marketing. I don't want to keep beating that drum, but that is the purpose of my column. Once again, marketing is separating the winners from the losers.
It makes me nauseous when, over the last few weeks, I've watched farmers collect their LDPs — just because it looked good. No rhyme or reason, they just wanted the money. Others have put grain under loan with no idea of what they're going to do next.
It is thoughtless decision making such as this that leads to wide separations of income. Unfortunately, some producers would rather go broke than admit they don't know how to play this game.
Most of the opportunities will continue to be in the area of expansion. The big are going to get bigger and the small are going to go into early retirement. There will likely be better opportunities to sell corn and soybeans down the road. I'll keep you posted.
An old commodity trader once said, “If you have a bad trade, forget it quickly. If you have a good trade, forget it even quicker.” Farming is much the same way. If you've made some bad mistakes this past year, forget them and move on. If you've made some good ones, forget them as well.
This coming year will be different than the last, and all we really learned last year was what we should have done then.
Richard A. Brock is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report. For a trial subscription and information on Brock services, call 800-558-3431 or visit www.brockreport.com.