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Showing posts from August, 2016

A Positive Attitude is an Asset -- Take Care of Yours and Watch Out for Others in These Challenging Economic Times

by Don Nitchie, Extension Educator
We believe the best asset that successful farm mangers have is a positive attitude – especially in the face of less profitable times.  We think a big part of this is due to fact that successful farmers are comfortable analyzing their finances and acknowledging their strengths and weaknesses. These producers recognize early warning signals from their records and analysis, so they are prepared for a potential downturn or negative situation.
Despite being proactive managers who maintain a positive attitude, everyone is experiencing some level of anxiety or stress under the current farm market conditions. As a result, you or your business partners may be more self-deprecating, critical of family members, self-doubting, or just generally feeling a higher than normal level of stress or anxiety. It is nothing to be ashamed of, but it also should not be ignored. It is important that you, as family members, friends and business partners, watch for any major att…

Does the Dairy MPP pay?

by Betty Berning
Extension Educator
In early August, the United States Department of Agriculture published the milk margin for May/June 2016 and it was $5.76.  The calculated USDA milk margin is used in the Margin Protection Program for Dairy (MPP) to determine at what levels (and if) this program will make a pay-out. MPP is an insurance like program for dairy producers that was a product of the 2014 Farm Bill.  Dairy producers select a margin level that they’d like to protect on their milk sales.  Farmers can choose to protect margins from $4-$8/cwt.  The $4/cwt level costs $100 to cover administrative fees.  From the $4/cwt level, coverage levels increase by $0.50 increment (e.g. $4.50/cwt, $5.00/cwt, etc) to $8/cwt.  As the margin levels increase premiums also increase. Table 1 shows the payout at each level for the May-June period.  Everyone with $6.00/cwt or more coverage received a payout.  This is the first time the program has paid at a $7.00/cwt or lower level.  There were a coup…

Tips for working with your lender

by Betty Berning, Extension Educator
One of my first jobs out of college was as an agricultural loan officer in Northwest Wisconsin.  I really enjoyed working with producers to help them achieve their business and personal goals!   This job was my training ground to understanding the inner-workings of a business.  Sure, I had learned about business in lectures and textbooks, but it was as a lender that I really learned how a business works.  I also saw how successful farms worked with their lenders and I’d like to share a few of those observations with you.
Tell your lender about large purchases.  I can think of a few occasions where I was visiting with a customer about financing a new piece of equipment or renewing a line of credit.  Everything would look really good and I would leave the farm thinking, “great, this will be easy to get done.”  And then… they would call to tell me that they’d forgotten about a few pieces of equipment or land that they’d purchased the previous year.  Yike…

Surviving Low Corn and Soybean Prices

By David Bau, Extension Educator

For the past few years corn and soybean prices have risen and fallen deeply.  Current corn price starts with a 2 in front, something not seen since 2006 as indicated on Table 1 below.  While 2016 soybean prices start with an 8 something not experienced since 2007.   Prices started in 2005 with an average soybean price of $5.80 and an average corn price of $1.68.  These prices increased significantly to a high for soybeans in 2013 at $13.99 and $6.83 for corn in 2012. With soybean price more than doubling and corn prices quadrupling. In 2015 soybeans prices are almost $5.00 off the high and corn is over $3.00 less per bushel a dramatic and quick change.

Table 1. Worthington Average Cash Prices for Corn and Soybeans

Meanwhile, during this same time frame, soybean input costs increased from $267.36 per acre on average in southern Minnesota to a high in 2014 of $538.91 per acre in Table 2. These figures are from the farmers records in the adult farm manage…

Balance Sheet 101

By, Betty Berning, Extension Educator
          The last time I posted to the blog, I talked about money and how to manage your finances, particularly during a time of low market prices.  As a refresher, remember that understanding your income and expenses is very important.  This allows you to determine where you might be able to make changes so that you can spend less or make more money.  I also mentioned the importance of proactively managing income and expenses as opportunities present themselves.  If you are able to “lock” in a positive margin, or profit, for a date in the future, consider doing so, rather than waiting to see if the markets are better at that future date. Now you may be thinking, I get it, I need to understand my cost of production.  As long as my income is greater than my cost of production, I should be in good shape.  That is true.  It is just the beginning of becoming financially savvy.  The next step on your journey is to understand your financial statements.  …