Across the Editor's Desk: Protecting profit
The one sure thing that comes with record commodity prices is the determination of costs to eat away your profit margin. The run-up of 2006 to 2008 was a dramatic example, with fertilizer in particular. USDA's projection for more than 12 million additional total crop acres this year creates even more demand.
“While our fertilizer-use needs are seasonal, U.S. farmers are part of a global market with increasing demand year-round,” says Joe Dillier, director of the plant food agronomy division of Growmark. “Price volatility is not going away.”
The volatility in recent years is causing more farmers to look at locking in fertilizer costs at favorable profit margins. For example, in January, Al Kluis of Kluis Commodities recommended that clients contract 2012 crop fertilizer needs while also forward-pricing equivalent bushels in the December 2012 corn futures contract.
“We believe that being able to pay your fertilizer bill with 10% to 12% of your bushels is very favorable,” says Kluis, who writes “Your Profit." “It is a spreadsheet decision. You make it and don't look back.”
He adds that more fertilizer retailers are offering forward pricing as more farmers request it, particularly in competitive areas.
Generate More Success For Now And The Future
I invite you and your family on August 11–12 to the Generating Success Conference: The Future of Your Farm Business Now. The conference will be in West Des Moines, Iowa. It will be presented by Successful Farming magazine, sponsored by Stine Seed, and supported by Sukup Manufacturing.
The purpose of the conference is to help you plan, organize, and manage your family business for success and to prepare it for a smooth transition to another generation. Presenters include Jolene Brown, Don Jonovic, and Jane Jenkins Herlong.
To provide more interaction, attendance is limited. The focus is on ideas you can take home and put right to work. To learn more about the conference agenda or to register, visit www.agriculture.com/generatingsuccess or call 866/268-9151. Ask about discounts for three or more.