The Management Calendar

Farm Business Management Update, April 2008 - May 2008

Gordon Groover (xgrover@vt.edu), Extension Economist, Farm Management, Department of Agricultural and Applied Economics, Virginia Tech

I’ve been traveling a bit this winter and the discussion begins with the uncertainty of prices and costs and what that means to the bottom-line and then there’s the drought question. If you are looking for reasons to worry this year, there are plenty to go around. I recall one of my relatives making this statement, “I have to worry because no one else is going to.” He was a grand worrier, and in the tough times he could summarize all the possible negative outcomes to any event or scenario. This approach is very useful, yet it is only the first step in managing risk. There is a chance that by listing out all the negatives that you end up wanting to hide in the barn or spend all day in the cab of the tractor with the cell phone turned off. The most important factor is not to dwell on the downside risk, but to go back to your long term goals and the business and family goals to reacquaint yourself with why you are in this business. Then systematically work through the downside risks, estimating their likelihood of occurrence, use your records to measure the fiscal impact to the business, and possible alternatives and/or strategies to address each concern. This process helps you gain perspective and control over the backlog of items that need to be worried over. Make sure you include everyone in the business to consider alternatives to the current way of doing business and have them look for ways to improve revenue and cut costs. Make sure you consider all suggested items and react positively to all comments and suggestions. Reward people for making suggestions. There’s plenty to worry about, but try to put that effort to good use in addressing alternatives to the current way of doing business.

Selective information available that might be useful:

• Current thinking about the drought at the National Weather Service Climate Prediction Center for most of VA is “drought likely to improve, impact ease” (valid to June 2008). In the Valley, like most of the Midwest and Northeast areas, they are neutral about the threat of drought. To keep an eye on NOAA predictions visit their web site at http://www.cpc.ncep.noaa.gov/index.htm.
• High grain prices may lull crop producers into thinking less about marketing. Please make sure that marketing is still high on your to do list. Grain prices are up and so are inputs costs, so to insure positive returns, a sound marketing plan needs to be in place and followed. Anyone feeding grain knows the need for a sound marketing plan. Need I say more? To keep abreast of the outlook and markets producers should visit two sites regularly. Our own Mike Roberts writes a 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.
• 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, fruit, eggs, poultry, and other markets on the East Coast at http://www.ers.usda.gov/Data/OrganicPrices. AMS adds new products to the list as the sufficient data is available.

Listed below are the items that need to be included on the farm business managers' calendar for spring of 2008.

• 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.
• Livestock producers should develop a detailed feed budget for all of 2008 and winter 2009. Include current feed costs, estimate this year’s production under average and drought conditions, and estimate demand until 2009. Deficits should be addressed now. First, look locally for alternatives, for example, can you contract with a neighbor to buy their forages or grains, can you rent additional lands, can you work with a grain farmers to harvest his grains as silage, can you buy grain at harvest at a discount, consider high moisture grain storage, and so on. Second, if you cannot find local solutions then look to reputable brokers for forages and try to lineup part of you supply needs this spring. As the season progresses keep the budget up-to-date to male sure you have covered your feed demand one year out.
• 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://www.agric.gov.ab.ca/app68/agsoft
• 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.

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