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5 Ways to Cope With Tough Times
Today’s tough economic times are bleeding farmers’ bottom lines. How to cope? Here are some ideas from four farmers – Darren Armstrong, Belhaven, North Carolina; Kristjan Hebert, who farms in southeastern Saskatchewan; and Ben and Hans Riensche, Jesup, Iowa – that they are using to weather this current economic storm. The quartet recently spoke at a late-September BASF media briefing at Research Triangle Park, North Carolina.
1. Use Technology Wisely
“Technology is not the enemy, says Armstrong. “Technology is the solution.” Automated guidance keyed Armstrong’s transformation toward technology. “GPS and autosteer have been the biggest change,” he says. “That’ what started it, the ability to zone in on an area, whether it is the seeding rate or fertilizer, and into variable-rate soil sampling.”
One technology Hebert is excited about are soil probes that measure usable water in the top 4 feet of soil. “We were quite good at evaluating the top 2 inches, but we had absolutely no idea what was going on with the other 46 (inches),” he says. “We’ve actually seen canola wicking water by the 25th to 30th of June at 4 feet down. It’s really changed our management style, just the way we fertilized in the spring vs. now, when we’re shooting algorithms off of what soil-available moisture is and using 30-year rainfall curves in trying to manage every acre.
“Thirty or forty years ago, we were managing the farm,” Hebert adds. “Ten years ago, when variable rate came in, we were managing crops. And in today’s world, we might not be down to (managing) 1 acre yet, but we’re down to 4 and maybe 2, and we aren’t far off from 1.”
Sometimes, though, technology has unexpected consequences. “You hear a lot of bad news (about weather), that there will be a terrible crop,” says Armstrong. “But they (farmers) plant, and they get great emergence, a crop that is resilient, and end up with good yields.” Quite a bit of that is due to seed technology that helps crop withstand adverse weather, he says.
On the other hand, the market knows this, too, says Armstrong. “It doesn’t panic the way it did five or six years ago,” he says. “There’s not that huge run-up in prices you’d see five to six years ago. I liked those market swings, by the way, for pricing opportunities. But it shows you how far we have come with plants being able to tolerate stress.”
2. Sell Direct to End Users
“Besides yield, there is quality of crops,” says Ben Riensche. “People are very concerned about what’s in their diet and who are willing to pay for that. My feeling is there’s a place on the dinner plate for everyone. If you want to pay me to produce in a certain way, I’ll do that.”
Riensche sees digital markets as a way to link farmers to these buyers. “I can tell the story of how I produced it, and the impact of how I grew that crop and get it to the end user if it has unique qualities that are better for milling, baking, brewing, and feeding,” he says. “Those are all salable qualities.”
3. Don’t Forget Carbon Markets
Alternative market streams also include carbon markets. Entities exist that want to pay farmers for putting carbon back in the soil to sequester greenhouse gasses. “If you can demonstrate an increase carbon in soils, that is marketable,” Riensche says. He sees sensor technology as helping farmers prove they are doing this.
4. Integrate Data
“I think currently there’s a huge rush to try and get a whole bunch of data,” says Hebert. “But I wouldn’t say that there’s a huge rush to analyze and aggregate it to a point where farmer is able to use it at high speed. You can take a company like Walmart. They turn over their inventory 70 to 80 times a year. We get to turn it over once (per year), right? So, we get 30 tries before the next generation takes it over, which means we need to get so much per year off that data. We need to get to a point where we can aggregate it and analyze it live,” he says.
Hebert envisions a point where if data indicates a field needs to be top-dressed with fertilizer the next day, a prescription map can be loaded into the implement to do it and give a farmer a yield prediction so the trigger can be pulled on a marketing move.
5. Manage Policy-Induced Policy
“I think when it comes to Mother Nature, we’re fiercely independent, and we’ve got pretty good at managing Mother Nature (with insurance), not volatility,” says Hebert.
Still, changes in government policy and tariffs have increased in the last decade, he says. This has negatively benefitted cash flows and is something that farmers will contend with in the future. “Before, we would just grow a crop and sell within six or nine months and then start all over again,” he says. “I think what we need is to become better risk and finance managers so that our working capital ratios and debt-to-asset ratios are 12 to 24 to 36 months on both sides of the growing season. It becomes a cash-flow issue when you have to sell into a (policy-induced) depressed market.”
READ MORE: 20 Strategies That Farmers Can Use In 2020