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Across the editor's desk: January 2007

Agriculture.com Staff 01/04/2007 @ 10:40pm

Among my favorite sayings by farm business consultant Don Jonovic is this: "The goal of many farmers is to break even at a higher and higher level every year."

Jonovic writes the "Can their problem be solved?" column (page 28). He knows how much farmers hate paying taxes. In years of exceptional income, farmers are naturally inclined toward what economists would call a propensity to spend. And 2007 looks like such a year.

Corn prices a year ago were around $1.25 to $1.50 per bushel lower, depending on location.

Those sales are pretty much accounted for in the most recent tax filing of many farms.

The big run up in corn prices beginning in September helped push total corn cash receipts to a record $23 billion. Wheat also reached a record high in 2006 at $7.4 billion.

But total production costs were up considerably, too. Still, many analysts expect corn prices in 2007 to average 50¢ to 70¢ per bushel better than 2006, which would push net income from corn to dream levels.

A strong majority of farmers in an Agriculture Online® Ag Poll expect prices to hit at least $4 per bushel sometime this year. Such price opportunities for remaining 2006 inventory as well as 2007 and 2008 production also present income management opportunities.

Prudent advisers would suggest setting aside a reserve for the inevitable below-average income years. In addition, many farmers would choose paying down debt as a wise alternative.

Land, like a big magnet, eventually claims rising profits from crops. Future crop income expectations get paid up front in current premium prices. Thus, various pockets of the Corn Belt are showing record land price transactions. Rental rates will climb as well.

Any business leader will tell you it is more fun to manage rising costs and to choose among additional spending and investment options when income is rising than when it is in the tank. So as you make your crop-pricing decisions this year, remember to reward yourself and your family, too.

You certainly don't need any advice from me on how to do that. Still, as a farm magazine's role is to be your conscience from time to time, let me toss out a few ideas.

Invest in your family. Use a truckload of those $3.50 bushels for a memorable family vacation.

Invest in your home. You know what your spouse would most like. Buy it and put a little label on it to help remember $3.50 corn!

Invest in yourself. Find a business, estate planning, or marketing seminar you'd like to take to help you grow the business or to clarify your long-term plans.

Invest in your farm. See the Machinery Show Insider package starting on page 34 for a preview of the latest technology you'll see at winter trade shows.

Share your abundance with a world in need. Research shows that generous people are happier and they live longer.

Among my favorite sayings by farm business consultant Don Jonovic is this: "The goal of many farmers is to break even at a higher and higher level every year."

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