It didn't take long for FARM Assist to help Scott Averhoff make a sound management decision for his Ellis County, Texas, farm.
FARM Assist is a long-term strategic planning program for the whole farm offered by the Texas Agricultural Extension Service.
Averhoff was considering adding on-farm storage to his grain and livestock operation, so that was one of the first analyses he ran with Texas Extension economics consultant Dean McCorkle.
Averhoff has been using a neighbor's facilities to store grain and likes the convenience for transportation and marketing. He says storage allows him to keep combines running without having to stop and truck grain to market. He also sees on-farm storage as a sales option that allows him to hold grain until harvest-time prices improve.
“FARM Assist is a very detailed program,” Averhoff says. “We provide our farm records, including production and yield figures, and we get back reams of data. The Extension economist comes to the farm and goes over the results with us. It's that complex.”
Averhoff says he wanted to make certain on-farm storage would pay for itself and provide a net return on his investment. He started the program in December and got his first analysis in March.
“We found that corn prices would have to improve by 60 cents per bushel over harvest-time prices to earn a profit from on-farm storage,” he says.
“We would have to fill the bins every year with corn, the only crop that showed any basis improvement four months after harvest.”
Averhoff says the analysis includes a seven-year payout and the 60 cents per bushel improvement would be necessary every year.
He says he was surprised that the structures were as expensive as they are. “We figured construction costs at $2.80 per bushel,” he says.
“We know the advantages of storage, but the overwhelming cost of construction is the key to making it pay.”
Averhoff says the FARM Assist program identified no other “striking revelations” on his farm. “We have not identified other crops that will improve profit potential and we have no plans to cut fertility or other inputs to reduce costs. We're running a lean operation already.
“The program gives us a true sense of where we are. We put in actual production information from our farm, so we get accurate evaluations. With this information, we don't make business decisions based on only one year of data.”
He says farmers tend to remember the extreme years in production cycles and may believe yields run higher or lower than a close analysis will indicate.
“The last two years, we've made good corn crops,” he says, “better than 100 bushels per acre. But an analysis of 10 years shows our average is close to 70 bushels.”
He says that information not only helps him make production decisions but also helps him establish accurate yield histories with the Farm Service Agency. “That's essential for government payment programs and insurance claims.”
He gets information in graphs and percentages. “We've found that the crops we're growing now provide our best profit opportunity. Wheat, corn and cattle are the most conducive to our conditions.
“We've considered other options, organics, vegetables and specialty crops, but they simply don't look promising for our operation. We've heard of several farmers who tried specialty crops, following the 1996 farm bill, who soon came back to their basic crops.”
He says not only do farmers find that specialty crops often provide little more, if any, additional profit, but also switching acreage reduces the base for traditional crops.
Averhoff has considerably less acreage in grain this year than usual.
“We only got 65 acres of corn planted. Conditions were too wet to get seed in the ground. We were fortunate that we did not have a lot of fertilizer or herbicides applied early,” he says. “Our prevented planting insurance might help recover some lost income.”
His wheat also has struggled. “I have two good fields of wheat, where it was dry enough in February to get fertilizer on.”
He topdressed 20 percent of his wheat crop adequately. He flew on nitrogen on 40 percent and another 40 percent was not topdressed at all.
“Some fields were too close to urban areas to fly on nitrogen,” he says. “Some of it still looks OK, but yields will be down.”
Averhoff says hard years such as these make programs like FARM Assist extremely important.
“We can see that any equipment we buy will have to show an ability to pay for itself from the crops we grow,” he says.
Weather, he says, always provides uncertainty. “But supply and demand for grain concerns us as well.”
Averhoff, a member of the Texas Corn Producers Board, says U.S. farmers “have the ability to out produce demand.”
Until that situation turns around and prices begin to improve, operating lean will be critical.
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