Missouri Ag Connection - Managing the Cutbacks

Missouri Ag News Headlines

Managing the Cutbacks
By: Kevin Hansen, Ag Business Specialist - 02/08/2010

Over the last couple of years, all businesses have had to make cuts here and there. Our economy struggles to make ends meet. There are those that take some funds from one source to fund another and still we wonder why we are running short in the grand scheme of things. The big question becomes whether or not your farm business can sustain another crippling year and what you know about your business to see that it does survive. Throughout 2009 we have seen the downsizing of businesses, their services, and even staff at the expense of our never ending needs. Moving into 2010, things may need to change and will you be ready for these changes?

So, what changes lie ahead for your business dealings? I would strongly encourage you to look at efficiencies. We know that input costs are going to continue to happen. Thus how can we minimize the costs that are bound to happen?

For the cattle producer, I just read an article about evaluating productivity in the herd. The article states that you can't evaluate and manage what you don't measure. Thus, a change might be to consider the efficiencies of the cows we choose to keep. Of those efficiencies, feed costs can be as much as 50-60 percent of the costs to maintain her. Furthermore, knowing her productivity in the past may guide your decision making for the future.

If you are a row crop producer, taking a look at the coming year and deciding which managerial practices you would like to incorporate into the budget will aid in planning out your needs. For the folks that are doing nutrient management, the variable rate application pays for itself through savings in applied nutrients. Furthermore, the opportunity to receive cost share incentives are out there and available. Keep in mind, every dollar saved or earned helps on the bottom line.

Seed prices have increased for the coming year. Talk with your seed representative to determine which variety is most likely to be most profitable for your farm. Keep in mind that University of Missouri has done variety trials and there may be information you can use to help with decision making. A five bushel difference in soybean yield adjusts your bottom line by roughly $50/acre.

Whether or not the cutbacks will come in the form of less inputs used, reduced personnel, or efficiencies within your individual enterprises, the key to the whole thing is management of your resources. Knowing what your business is able to do or provide in comparison with like businesses allows one to be a top notch manager. Visit your county extension office and ask for guide sheets on rental rates or custom farming rates to get an idea of what prices are doing. Also, you can visit the FAPRI website at http://fapri.missouri.edu and get the latest budgets and calculators for decision making for 2010.