How to Determine Your Crop Investment During the Growing Season
by Andrew Hunt – Research Agronomist, Growers
How can you ensure your farm stays profitable for the long-term even in a volatile market?
You can’t control the weather, fluctuating markets, or fixed budget expenses. However, you can be smart about finding a balance between in-season expenses and your return on investment.
Many crops have narrow profit margins, making declining commodity prices and increasing production costs more painful. As a result, the best way to increase profits is to reduce costs.
When you know how much you’ve invested into a crop (at any given point during production), you’ll know when it is or isn’t reasonable to invest more money into a crop.
Review Your Farm Budget
Traditionally, farm budgets are split into fixed costs, such as land rent and equipment, and variable costs like seed, fertilizer, and chemicals. Determining production spending will help you find potential cost reductions.
A farm’s fixed costs shouldn’t usually change during the year, but in-season, individual crop decisions will compete for your remaining farm budget. As a result, it’s advantageous to know how much you’ve invested in your crop at all times.
Find a Balance
Knowing how much you’ve spent at any point during production will help you determine your break-even point – or the value at which yield loss from stress or pests equals the costs of treatments or inputs to protect or potentially recover from stress.
In-season crop inputs are not a guarantee of increased yields. While timely and judicious applications may protect the crop or improve yields, there may be no resulting financial value in the application of these various inputs.
If you don’t know how much you’ve already invested in your crop, it’s difficult to determine whether additional inputs are worth the financial risk.
Determine Your Crop Investment
Your investment in a crop includes both time and production costs, which requires meticulous budget keeping. Your best approach is to determine your average cost per unit of yield.
In what areas are you doing well, and which areas can you improve? After adjusting for fixed costs, how much does every unit of fertilizer, seed, or chemical increase your cost per unit yield?
You should base all in-season input decisions on how much you’ve already invested in the crop.
Use Technology to Make Better Decisions
Collecting and analyzing data helps you make better decisions and reduce costs by improving performance and/or reducing inputs.
Growers works with farmers and partners across the country. We test their soil, create prescriptions for seed and fertilizer, and make decisions based on data from their farms.
We understand when it comes to your variable costs, the economic benefits from applications will be site- and situation-specific to your fields and crops.
Our technology has the potential to increase your farm’s productivity, increase efficiency, reduce costs, help you make profitable management decisions, and collect various sources of data.
Growers can help you improve your data collection so you can make solid, data-driven decisions. We want to help you gain every advantage in today’s competitive market to help ensure your farm’s success for the future.