Hello, northeast Ohio. As a son of a dairy farmer, it pained me to read last week’s (Oct. 4 Farm and Dairy, page A1) Dairy Excel column written by Dianne Shoemaker about Ohio losing more than 7 percent of its dairy herds over the past year.
My heart aches for the 172 farms which have made the tough decision to exit the dairy industry and for others who are contemplating the same action. I remember what it feels like to sell cows at the bottom of the market, which our family did when my dad passed away from pancreatic cancer in 2010.
Helping my mom sell our cows at 50 percent of their value was one of the hardest things I ever had to do on the farm.
Watching the cows leave was like watching a family member leave home, never to return.
Dianne made a great point in her article about the need for farm families to take a hard look at the whole picture and make decisions while they still have choices.
Not just dairy
This advice is not only for dairy farm operations. This advice goes for other farmers, and I would contend that crop farmers need to be on high alert.
Bin-busting yields, large carry-over grain stocks, low margins, and the trade war with China may keep commodity prices depressed for longer than we desire.
In my September Dairy Excel column, I shared how important it is to face challenges head-on. Don’t disappear into harvest and tune out the world.
It is especially important not to ignore the financial books. Keep one eye on the trade war and farm bill discussions, but more importantly, keep one eye squarely on where you are financially.
Farm Science Review
One place to get a good pulse on the bigger picture of what is happening in agriculture was at Ohio State’s Farm Science Review held at the end of September in London, Ohio.
The review was full of machinery demonstrations, research sharing, and Extension personnel providing management strategies.
Today, I would like to share some of the management tips which were shared at the review:
• 2019 budgets: Barry Ward, assistant professor in OSU Extension’s Extension Department of Agricultural and Natural Resources, shared his crop budget forecasts for 2019.
Sadly, these numbers do not look too much different from the past two years. Barry reports that on average, after paying all the variable and fixed costs per acre, there will be only $47.19 per acre for corn; $100.08 per acre for soybeans, and $88.34 per acre for wheat to cover land rent/expense. This means 2019 will be another tight year. So it is imperative that producers examine their budgets closely. Any producer who would like the 2018 budget estimates for corn, soybeans, and wheat can access them at OSU Extension’s farm office website at https://farmoffice.osu.edu/farm-management-tools/farm-budgets 2019.
• Rental rates: Given our low margins both Barry Ward and Michael Langenmeier from Purdue University shared that rental rates should drop in 2019.
But will they? Lowering rental rates once they have increased is often a tough pill to swallow for most landowners.
I would contend it becomes an even more difficult discussion if you rarely talk to them during the year.
Now is the time to have more communication with the landowners you are renting from, not less.
Have you shared your crop budgets with your landowners? Are you checking in with landowners during the course of the year or are you lucky to have a conversation once a year with them?
One bright spot is that CAUV taxes have come back down a bit for the counties which have be re-evaluated.
• Farm stress: Kathy Goins presented each day at the review on the increased stress levels in the farm community.
Kathy provided a lot of great tips for recognizing stress in ourselves and others. She also provided tips for managing our stress.
One point which she shared was the importance of connecting with the people around you. Stress can lead to individuals becoming more isolated.
This isolation can increase depression. Don’t stop attending community events.
Stay connected by giving back to those around you. One thing I have learned in life is that we are all battling life’s ups and downs.
Your kindness may mean more than you can ever imagine. Approach each conversation with others as your chance to lift them up. In turn, you may find your spirits rising.
• What do I do?: A lot of advice was provided on how we can weather the storm. Bottom line, the key to surviving in this new normal is to distance ourselves from the bushels per acre or pounds of milk per cow mentality.
Instead, we need talk about the cost of production and the net rate of return per bushel, gallon or hundredweight.
Be a price enhancer, not a price settler. Push the pencil.
OSU Extension has financial professionals who can help you crunch the numbers and develop a game plan. Check out: https://farmprofitability.osu.edu/ for more information.
• Final thoughts: There was not a lot of good news from the “experts” with regards to profitability for the short run.
I cannot stress the need for producers to develop sound budgets for next year and to improve their record management systems. A dollar an acre saved here and a dollar saved there will make a huge difference.
I challenge you to follow Denis Waitley’s advice of: “Change the changeable, accept the unchangeable, and remove yourself from the unacceptable.”
Have a good and safe day.
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David (and please relay to Barry Ward): Recently I discussed with John Patterson to ask (OSU Ag Budget) for calculations of how much additional emergency relief to give to farmers to neutralize the prospect of Soybean etc Tariffs being imposed by China. The Federal government will generate Tariff money on Chinese imports which must be spent on keeping farmers whole and profitable. Our state leglisators need to have the calculations to get the proper amount of relief money to each farmer. Let’s assume the States should ask for a piece of the tarrif pie and then to apportion it properly to the injured parties. I don’t read anything about how the government plans to spend the Tariff money. Hoping this will get farmers a little ahead of the curve instead of a reward which is too late.
As usual, these were very good reflections and advises provided by Dave Marrison. Always down to earth.