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Do better in 2012

Al Kluis 12/06/2011 @ 10:28am

As harvest wrapped up across the Corn Belt this fall, farmers went in to meet with their accountants, bankers, and tax advisers. Some farmers then went to buy seed, fertilizer, and equipment in order to manage their 2011 income tax bill. Other farmers went on to meet with a new banker and to see if they could get financing for 2012. Several ag lenders said they saw a very wide range of farm profits within their loan portfolio. This was evident even though the weather pattern and the yield potential were very similar in the counties where they lend.

A lot of what worked in 2011 will likely work for you in 2012. I suggest you do a thorough review of what worked and what did not work in 2011. You can learn from your management and marketing mistakes you made this year.

The largest difference for most farmers' profits in 2011 was the yield they were able to harvest. Big yields usually result in big dollars. With $6 corn and $13 soybeans, a 10- to 15-bushel drop in soybean yields or a 20- to 30-bushel drop in corn yields had a big impact on farmers' bottom lines.

I'm not a crop-production guru, but I did speak at and did attend a lot of seed and profit planning conferences this summer and fall. Following are three observations from my travels from Missouri to Minnesota and from Colorado to Illinois.

“You can learn from your management and marketing mistakes you made this year.”

1. Corn-on-corn was not worth it. Some farmers who were able to get the corn planted on time and were in an area that received timely rains in July and August were able to get second-year corn yields that were within 10% of the first-year corn. If you are one of these rare farmers, count your blessings and send your agronomist a Christmas bonus. Many farmers who were in areas that turned hot and dry in July through August took a yield loss of 20% to 40% on the corn-on-corn acres they planted in 2011. This lower yield had a very negative impact on the farm's bottom line.

2. Planting early paid big dividends. This was especially true if your corn got through the critical pollination time period with no major damage. When you get your corn planted is somewhat a function of weather, but I did see where some large well-organized farmers with a lot of drain tile were nearly done before their neighbors got started planting corn in May. With the early-planted corn yielding 30% to 50% more than the late-planted corn, the lower yields on late-planted corn had a huge negative impact on production levels and farm profits.

3. The early-planted soybeans that matured early out-yielded the late-planted soybeans. Many farmers wished they had gone with all early-maturing soybeans in 2011. I cannot recommend that you change maturities in 2012, as weather is just too variable. This year again showed the importance of spreading out your risk by choosing several different maturities. I did consistently hear that farmers felt the RR 2 soybeans were worth the extra expense. They will plant all the RR2 soybeans they can in 2012.

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