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Commentary: Farming for Profit in Good Times and Bad

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By Gary Truitt

“You load 16 tons and what do you get, another day older and deeper in debt.” Tennessee Ernie Ford’s 1955 hit came to mind as I walked the Fort Wayne Farm show this past week. I had a lot of company as the crowd of farmers was good but, like me, they were walking and not buying.  The day before the show began, the corn and soybean futures market suffered double digit losses that further fueled the feeling of pessimism that pervades the farm sector these days. Yet, there remains the bedrock of dogged determination on which most in farming are rooted. If we can just find a way to survive, things are going to get better.

The challenge, however, is finding that way to survive. For many, the things that worked in the past are not working any longer.  Simply buying or renting more land, building more storage, borrowing more money, or just doing without have been tactics used to make it through lean times. Yet today, these are not possible or as helpful as they once were. New techniques, new practices, new technology, and a new philosophy may be required.

A sign of the times is that there are a lot more banks and financial institutions exhibiting at farm shows these days. Several of these folks I spoke with had the same message: have a plan.  “Even if it is a plan to lose money, just bring us a plan,” said one banker. New data tools allow producers to determine the profit on a field-by-field level. This kind of data, along with an up to date and realistic balance sheet, is what it is going to take for many producers to get the operating credit they will need for 2019.  This will apply to livestock producers as well.

What is making 2019 more challenging for both producers and lenders is the uncertainty and volatility we are facing. While there has always been uncertainty and volatility in farming, this year the prolonged government shutdown and trade war are posing major problems. While both of these issues will be resolved in time, the unknown is if it will be weeks, months, or years before that will happen.

There is one strategy that can aid producers in their efforts to survive: information. Staying informed is one of the most effective and least costly things you can do. Today information is free; and, with the click of a mouse or the twist of a radio dial, the latest information on the market, weather, government policy, credit conditions, agronomic research, and technological breakthroughs can be yours.  Staying informed is your best defense against the volatility and uncertainty that faces us today.

News items to pay particular attention to include interest rates, the government and  USDA shutdown, federal and state regulations, land values, input costs, local basis levels, alternative crop options, and market and weather moves. Establish a routine to update yourself on these issues every day.

Ironically, this routine will serve you well when times do get better. While farming is a lot more fun when times are good, it is not necessarily any easier.  Another good habit to cultivate is checking your attitude.  It is easy to get too pessimistic and lose perspective; and, in good times, it is also easy to get too confident and to make unwise decisions.  Going to farm shows, farm meetings, and conventions is a good way to network with other producers, learn new things, and get a larger industry perspective.

In short, stay informed, stay positive, and stay farming.