Written by John Schlageck Tuesday, 14 August 2012 13:16
The dog days of summer can be trying, especially for farmers and ranchers who are experiencing one of the worst droughts in decades
A summer like 2012 brings little rain, grueling heat and fiery winds. This year’s drought and string of more than 25 days of 100-degree days has finished off most of the dry-land corn and has now zeroed in on destroying this year’s soybean and milo crops.
What will happen to this fall’s upcoming winter wheat crop remains to be seen.
During this period, it’s healthy to interject a little humor into the daily diet. A chuckle or comic relief is good for the mind and body. With that in mind, here’s my offering for the middle of August.
I’ve yet to meet a farmer or rancher who isn’t continually searching for new, innovative ways to make profits. This week, let’s take a peek at the opposite end of the spectrum. Here are 10 sure-fire ways to cut your profit margins.
(1) Blindly follow seasonal trends or patterns. If the market is going up—do not sell—it may go even higher. If the market is falling—do not sell—it may turn around and rocket back up.
(2) Never, under any circumstances, trust U.S. Department of Agriculture crop and livestock reports. From all the information available, these reports are “strictly legit.” But never mind. Discard these reports at all costs.
(3) Blame the big grain companies. Everyone knows they manipulate the farmer and make all the profits.
(4) Assume prices and costs are related. No place is it written that because you spend $1,000 an acre to produce irrigated corn, you are guaranteed a profit on your product.
(5) Hold the short crop because less corn, wheat, beans or milo must mean the price of these commodities will increase. In reality, by the time you hear a crop is in short supply, everyone else has heard the same news and the price has already gone up.
(6) Follow the majority. If your neighbor sells his corn, it is probably the right time for you to sell yours, too. Ignore most conversation in the local coffee shop, the town hall or other meeting places. Figure out your own marketing strategy.
(7) Ignore the futures market and basis because everyone knows that a bunch of speculators are rigging the market. Remember, speculators lose money, too, and provide liquidity for the market.
(8) Never sell until you have a crop in the bin. Often, before you harvest a crop is the best time to lock in profits. Take a hard look at future contracting.
(9) Always, always shoot for the market high. Smart marketers have abounded this philosophy for the goal of “shooting for higher.”
(10) When all else fails, blame your banker or your wife. You may just want to take a closer look at yourself and your production and marketing strategies.
John Schlageck is a leading commentator on agriculture and rural Kansas. Born and raised on a diversified farm in northwestern Kansas, his writing reflects a lifetime of experience, knowledge and passion.