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The Management Calendar
Farm Business Management Update, April - May2007
By Gordon Groover (firstname.lastname@example.org), Extension Economist, Farm Management, Department of Agricultural and Applied Economics, Virginia Tech
Selective information available that might be useful:
- Market outlook information for grain and livestock producers can be found at 2 sites. Our own Mike Roberts writes weekly outlook report. It is published on Mondays and is found at http://www.ext.vt.edu/news/periodicals/roberts/. On Fridays Emmit L. Rawls and Delton C. Gerloff publish the newsletter Tennessee Market Highlights at http://economics.ag.utk.edu/tnmkt.html.
- The price of energy has a tremendous impact on the overall profitability of farm business, e.g., price of diesel fuel, fertilizers, pesticides, transportation, and so on. Kevin Dhuyvetter (Professor and Extension Specialist, Farm Management, Kansas State University) has followed the trends in energy and their effects on agriculture. He has regular posts and articles on “Energy Prices,” a web site found at http://www.agmanager.info/energy/. To get monthly updates on projection for anhydrous ammonia and diesel fuel prices take a look at his article “Futures-Based Price Forecasts
for Anhydrous Ammonia and Diesel Fuel” found at http://www.agmanager.info/energy/PriceForecasts.pdf .
- Winners and losses: The prospects for higher grain and oil seed prices create happier times for grain producers and sadder times for livestock producers. Remember that profits are maximized when the value of the last unit of an input equals the value of the increase in the yield. What do we draw from this basic premise of economics? In the case of grain producers, as the value of the grain or oil seed increases, additional inputs can be used. In addition, previously allocated to less profitable crops can be planted in corn or soybeans. Obviously, most of Virginia’s grain production is dry land and yields are dependent on adequate rain fall. Prices must be locked in via a sound marketing plan. Use your crop yield data from production records, soil test information, fertilizer histories of each field, and consult with your extension agent for potential published field plot yield data that might shed light on yield responses. A note of caution about the happier times, remember that decisions you make now based on adequate cash flow and profitability will determine the outcome when grain prices decline. Make sure that all long-term investments are feasible at long-term average prices.
In the case of livestock producers, as corn prices bounce around $4.00 per bu., the reverse is true. Livestock producers will need to reduce the level of energy supplements to achieve the most profitable levels of milk production or weight gain. This feat is easier said than done. Yet continuing to feed grain at the same level with no change in output or an increase in milk or cattle prices clearly will result in less profit. As with the grain example accurate production records will help managers make educated estimates (guesses) of the profitable levels of concentrated feeding.
- Fifth District Federal Reserve Bank of Richmond publishes newsletter highlighting credit condition in agriculture. The quarterly publication is title Agricultural Credit Conditions and can be found at http://www.richmondfed.org/research/regional_conditions/agriculture/index.cfm
- Farm Bill information: Information on the 2007 Farm Bill can be found at the USDA Economic Research Service at http://www.ers.usda.gov/Features/FarmBill2007/.
- Organic Farmgate and Wholesale Prices: USDA Agricultural Marketing Service has a data set listing farmgate and wholesale prices for select organic and conventional produce items for the Boston and San Francisco markets. These are not necessarily in our backyard, but the Boston data do give us tends in vegetable and fruit markets on the East Coast at http://www.ers.usda.gov/Data/OrganicPrices.
Listed below are the items that need to be included on the farm business managers' calendar for spring of 2007.
- Make sure your Virginia state income taxes are post marked by May 1.
- Review first quarter livestock records and compare them to last year’s; look for problems and successes.
- Follow-up with your lender to review and update your line-of-credit needs.
- Prepare a crop record keeping system for a new year. If you do not have a crop record keeping system, consider purchasing the Doane’s hand-kept crop and machinery notebook, “Field and Equipment Record Book.” This notebook provides an inexpensive way of getting started. It can be ordered via the Internet at http://www.doanebookstore.com/ or by (800) 535-2342, Extension 220. The price is less than $20.00. For a selection of computerized crop record keeping software, take a look at the Agricultural Software Directory from Alberta Agricultural Food and Rural Development site: http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/econ4118?opendocument
- Update your marketing plan by collecting information on prices and world market situations. Be sure to check with your local Farm Service Agency for changes in government programs and signup deadlines. Review USDA and other crop and price forecasts. All USDA reports are listed on the internet and can be viewed by going to Agency Reports on the USDA newsroom page or visit www.usda.gov/news/releases/rptcal/calindex.htm.
Virginia Cooperative Extension