6 Crop Budget Cost-Savers

6 Crop Budget Cost-Savers

Keeping production costs in the black requires farmers to shave costs wherever they can. U.S. farmers, including those in the midwest, continue to battle high costs for labor, fuel, seed, and fertilizer – factors driving up food prices – as inflation sets into the economy.

Here are 6 ways farmers are readjusting their business cost structure that have been tried and tested.

1. Re-evaluate Insurance Coverage Options.
2. Electricity Can be Generated at Home.
3. Eliminate Storage Costs by Forward-Contracting Grain.
4. Capitalize on Conservation Efforts.
5. Reduce Excess Fertilizer.
6. Maintain Farm Tools and Equipment.

1. Re-evaluate Insurance Coverage Options.

Each year at tax time, it would be beneficial to do a self-assessment of your insurance coverage to ensure you’re getting the most for your money. Each category of farm expenses is compared to previous years.

Meet with your insurance agent annually to assess your charges, whether it be for crop, farm, liability, or health. Situations can change when you don’t even realize it. Quite often your crop insurance agent can help find ways to improve your plan, which could save you money!

Changes you make to your operation can also save on insurance. Liability costs can be reduced with a security system for your home, an alarm system for your cattle buildings, or a standby generator.

2. Electricity Can be Generated at Home.

For many years, sustainable farming has grown in popularity and solar-powered farming is the next big step. The use of solar power on the farm has the potential to reduce or eliminate electricity costs, thereby directly contributing to the bottom line. Alternatively, off-grid solar installations provide power in places where utility lines are not practical. Going solar is now more affordable than it has ever been. The solar industry has been growing at a rate of 54% per year, and because of that, installation costs have fallen by over 70% since 2010.

Solar power can be used for all the essential parts of a farm. It provides energy for livestock structures, including poultry barns, horse stables, and large livestock housing. Solar can also be used to power irrigation systems and electric fences so livestock won’t wander off.

Your solar energy system can also act as a backup power system for critical loads, preventing untimely or catastrophic system failures that could harm your business.

U.S. electrical power is primarily generated by burning coal and natural gas, which releases tons of harmful pollutants into the air. By going solar, farms and other industries reduce their fossil fuel consumption and release fewer greenhouse gasses. Today’s solar power systems are eliminating more than 74 million metric tons of carbon emissions per year. This is equivalent to 1.9 billion trees or taking nearly 16 million vehicles off the road.

3. Eliminate Storage Costs by Forward-Contracting Grain.

In recent years, farmers with substantial purchases have become more interested in forward selling due to the highly unstable farm prices. A forward contract allows you to secure a cash price for grain that has not yet been delivered. Doing so, helps you eliminate downside price risk and improves your ability to plan. It is essential for a diversified marketing plan to include forward marketing. If you select a forward contract, watch the futures market, and lock in your price when you desire. Then, at Colville Crop Insurance, will define expectations for final pricing, payment, and delivery, and continue to look for ways to help you improve your grain marketing.

4. Capitalize on Conservation Efforts.

Conservation Agriculture is a farming system that promotes minimum soil disturbance (i.e. no tilling), retaining a permanent soil cover, and diversifying plant species. In addition to enhancing biodiversity and natural biological processes above and below the ground surface, it improves and sustains crop production by increasing water and nutrient use efficiency.

Minimum mechanical soil disturbance
Direct seeding involves growing crops without mechanical seedbed preparation and with minimal soil disturbance since the harvest of the previous crop. Also called no-tilling.

Permanent soil organic cover
Keeping the soil covered is a fundamental principle of Conservation Agriculture. Crop residues are left on the soil surface, but cover crops may be needed if the gap is too long between harvesting one crop and establishing the next. Cover crops improve the stability of the CA system, not only in the improvement of soil properties but also in their capacity to promote increased biodiversity in the agroecosystem.

Species diversification
Rotating crops provides a diverse “diet” for soil microbes and allows them to explore different soil layers to find nutrients. Rotation crops can “recycle” nutrients that have been leached to deeper layers and are no longer available to commercial crops. This way the rotation crops function as biological pumps. Additionally, a diversity of crops in rotation leads to diverse soil flora and fauna, since roots produce different organic compounds that attract a variety of bacteria and fungi, which are responsible for converting these substances into nutrients that can be used by plants.

Learning more about Conservation Agriculture can help your crop be more efficient.

5. Reduce Excess Fertilizer.

It has been demonstrated for the first time that farmers can continue to produce high crop yields with far less artificial fertilizer if they adopt environmentally sustainable practices.

The addition of manure and compost to soils, growing nitrogen-fixing plants between crops, and cultivating a variety of products instead of sticking to one crop can all boost yields while protecting and improving farm ecosystems.

These practices would replace a significant proportion of chemical fertilizers, whose prices have risen due to high fuel prices. Consumers have been hit with higher food prices as a result of these price increases for farmers. Many countries were already facing food problems having exhausted their reserves during the pandemic.

6. Maintain Farm Tools and Equipment.

You may wonder why maintaining your farm equipment and tools is even necessary. To ensure that all tools are properly cared for and maintained, here are a few important reasons:

  • Your farm tools and equipment will last longer when you maintain them. By taking proper care of farming tools, you are extending the life of each tool.
  • Regular maintenance also ensures that each tool works more efficiently. When tools are in proper condition, they can get the job done faster.
  • When you properly care for your farm tools and equipment, you reduce the risk of injury to the operator.
  • Regular maintenance reduces the cost of maintenance down the road. If you keep up with the smaller maintenance tasks, you’ll be less likely to have to spend a large amount of money to fix significant issues or replace tools.
  • While regularly maintaining tools can seem like a lot of extra work, it will pay off in the long run. For questions about how to maintain your farm tools and equipment, reach out to our experts at Richmond Brothers Equipment.

How Do You Properly Maintain Farm Tools and Equipment?

  • Sharpening tools before and after each use. make sure that metal parts are as sharp, and which makes them as effective as they can possibly be.
  • Oiling or greasing any metal parts. It can help prevent rust on tools or equipment.
  • Wooden handles good? Ensuring that handles are strong can help increase durability and reduce injury for the operator. If you discover any defects, be sure to replace them right away.
  • Storing tools in their original cases. This helps protect them from damage.
  • Dry tools after use. This will prevent them from rusting.


Livestock Market Shakeups You Need to Know About

Livestock Market Shakeups You Need to Know About

Livestock has always been a tricky business because there are hundreds of variables that affect price and demand, but recent shakeups in the U.S. and around the world have made it even more unpredictable. New laws and geopolitical factors have a huge impact on these markets, and changes for one type of livestock can affect prices for another.

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Prices could tank or they could go up at any time. No one can say for sure, but you can keep yourself informed and protected to make sure you come out on top no matter what happens. I’m here to help you understand the issues and the different strategies available for protecting your hard work and income.

California’s Animal Treatment Law

The state of California recently passed a new animal welfare law designed to improve conditions on the farm for calves, chickens, and pigs. The new law calls for an increase in cage sizes for livestock, not just for producers in California, but also those who sell livestock produce to California. While most cattle and chicken producers haven’t complained, the hog producers are not happy.

Hog producers in Iowa who supply over a third of our country’s bacon are suing the state, saying it will take tens of millions of dollars to meet the new requirements and that the people who drafted the law don’t understand the implications it could have on the market.

Michael Formica of The National Pork Producers Council said, “To make the physical changes because it’s going to require either tearing down farms or building brand new farms, with all the supply chain disruptions, we keep seeing figures in the $15-17 million range for a family farmer so if you’re a family farmer already struggling with everything else going on in the economy now if you want to continue in the business, you have to go to your banker and ask for a $15-17 million loan to build a barn. It’s going to drive family farmers out of business and lead to eventually far more consolidation and integration.”

Despite their obsession with the plant-based diet, somehow California accounts for over 50% of pork sales in the US. And if producers in Iowa and other states can no longer sell there, that will make it near impossible to get there and drive up the prices of pork in all 50 states.

Other Global Factors at Play

India has recently approved the importation of pork from the U.S. Pork sales are going to skyrocket because India is a huge market of almost 1.3 billion people. Will that offset the price increase due to the drop in demand from California?

Just like nearly every other industry in the world, livestock producers are running into major challenges due to supply chain issues stemming from the Covid pandemic. The price of beef and all livestock produce is going up because the price of feed has gone up. The price of feed has gone up because the price of growing the feed has gone up. And the price of growing the feed has gone up because the price of gas, fertilizers, chemicals and seed has gone up.

When President Trump was in office, he was trying to level the playing field throughout the world, putting tariffs on other countries, especially China. In the short term, it was painful, which made it hard for people to understand and accept, but long term, it could have provided more stability for the whole market.

Now with President Biden in office, where will the administration place its priorities? How will changes in climate policy affect farmers and ranchers? Will the focus be on growing exports to India, China? Will changes be made with typical trading partners Mexico, Canada, and the EU? Will the trade agreements be workable long term or will they be short term solutions? I personally know several ranchers who started selling beef directly to consumers due to the pressures on the supply chain issues during the past 2 years. Will that continue? Will the recently passed livestock market transparency bill relieve some of the pressure on the livestock producers?

No One Knows–So, Be Ready For Anything

Regardless of who’s in office, there are a thousand geopolitical factors that can affect the livestock industry. The experts don’t know what will happen, farmers don’t know what will happen, and the government certainly doesn’t know what will happen. If the prices tank, what will happen to your business?

You can get puts and calls on your beef prices, but what if the price goes up? You’re going to lose out on all that additional margin. But if you have Livestock Risk Protection, then you’re covered if the price goes down and your extra gains more than cover the policy. It’s the best of both worlds.

No one can predict the future, which is why insurance is so smart. Call us today to talk about your livestock insurance options.


How to Bounce Back After Blowing Your Budget

How to Bounce Back After Blowing Your Budget

Nothing keeps you up at night like knowing you’ve tanked your budget for the month (or more) and set your cash flow back. I’m here to tell you from experience that going over budget happens to the best of us, and that life goes on. I’m a better man today because I survived to tell the tale.

Whether you treated yourself to some irresistible shiny objects, got duped into overpaying for something you didn’t need, or just had a run-of-the-mill emergency that cost you an arm and a leg, we’ve all been there. The trick is to not get down on yourself about it, learn from the situation, and make a plan to do better next time.

Here are three steps to bouncing back after you’ve tanked your budget and are feeling like you’ll never recoup your losses.

1. Beating Yourself Up Won’t Help

Even if this setback was 100% your fault and could have been avoided, it won’t do any good to beat yourself up about it. I know that’s a tall order for most of us hardworking folks, but it’s true. Actually, psychology and most religions tell us that the opposite is true: when we are kind to ourselves about our mistakes, we are able to fix the situation easier than when we’re not.

This is easier said than done. We all have a predisposition to criticizing ourselves because we humans need to learn from our mistakes in order to survive, but now that dangers are relatively minimal, the inner critic has become a bit overbearing. The more we recognize our inner critic’s voice, the easier it is to flip the conversation. Sometimes it helps to name your inner critic so you can tell it to be quiet. It also helps to start your day with a list of things you appreciate about yourself and/or a list of your accomplishments.

Que Sera Sera: whatever will be will be! And the sooner you accept that fact, the sooner you can get back up on your horse and keep working toward your goals.

Just 30 days of radical frugality, you’ll be surprised how much of a dent you can make in that debt. Maybe it’ll take 60 or 90 days. Whatever is needed, resolve yourself to stick it out.

Hold yourself accountable by sharing your plan with a trusted advisor, whoever that may be, and check in with them on your progress. Challenge a colleague to a savings contest to motivate yourself even further. Keep track of your progress, no matter how small it may seem. Again, this may be a lot harder than it sounds, but if you have faith in yourself and you rally your closest confidants to cheer you on and help you out, you can get through it.

The bottom line is: don’t let your financial failure get you down. It’s only temporary and I believe everything happens for a reason. You may not understand the reason until decades later, but I bet you will be thankful for this experience someday.

2. Making a Plan and Having Goals Will Help

If you’ve recognized that you blew your budget, chances are that you had a plan at some point and things just didn’t go according to it. So, it’s probably time to reassess. What happened that led to the blown budget? Is there anything you can do to avoid that in the future? (Like having the right insurance policies in place!) How much did you blow your budget by? Did you have to borrow or use credit? Do you need to adjust your budget going forward?

Then figure out how much more money it will take per month for how many months in order to get yourself back to where you started. Are there ways you can reduce your spending in the meantime? Or earn extra money somehow? Can you have a barn sale or put up a produce stand on the side of the road? Can you sell off a part of your business that doesn’t make much money and takes a whole bunch of your time and energy? Host a plough wash? Enter a baking or eating contest or throw one yourself?

Get creative! Ask your friends and family for ideas or host a brainstorm. I bet you end up with some great ideas.

3. Commit to Your Plan 100%

You’ve heard the old adage, “anything worth doing is worth giving 100%.” It doesn’t have to be forever, but if you can commit yourself to just 30 days of radical frugality, you’ll be surprised how much of a dent you can make in that debt. Maybe it’ll take 60 or 90 days. Whatever is needed, resolve yourself to stick it out.

Hold yourself accountable by sharing your plan with a trusted advisor, whoever that may be, and check in with them on your progress. Challenge a colleague to a savings contest to motivate yourself even further. Keep track of your progress, no matter how small it may seem. Again, this may be a lot harder than it sounds, but if you have faith in yourself and you rally your closest confidants to cheer you on and help you out, you can get through it.

The bottom line is: don’t let your financial failure get you down. It’s only temporary and I believe everything happens for a reason. You may not understand the reason until decades later, but I bet you will be thankful for this experience someday.


A Crop Insurance Agent’s 6 Favorite Quotes About Farmers and Money

A Crop Insurance Agent’s 6 Favorite Quotes About Farmers and Money

As a crop insurance agent, I’ve come to understand much about farmers and their relationship with money.

We all have favorite quotes, little sayings and nuggets of wisdom that are easy to write down and easier to remember. The following quotes are my 6 favorite quotes when it comes to farming and money. I don’t remember where I first read or heard these quotes, sometime during my many years as a crop insurance agent, but I stand by all of them as solid pieces of advice to think on and live by. Enjoy!

Farming is like going to a casino every day.

There’s casinos near a lot of my farmers. Gambling comes easy to many farmers because farming itself is like gambling. There’s odds, bets, risks, and the house always wins. You don’t always know what the weather or soil will do. You’re gambling everyday of your life. That’s why insurance is so important.

I never heard of anyone losing their farm paying for crop insurance.

Sadly, I’ve heard of people losing their farms because they didn’t have crop insurance. But over the years, I still hear many farmers say “I can’t afford the insurance.” Well, if you can’t afford insurance, then you can’t afford not to have insurance. It makes sense that if you plant even just 100 acres and something goes wrong, you’re potentially looking at a $100,000 loss. Can you afford a $100,000 loss?

Insurance is like a parachute. If you don’t have it the first time, chances are you won’t be needing it again.

This quote is pretty self-explanatory. That’s why I like it so much. I’ve never gone skydiving, but if I did, you can bet I’d be jumping with a parachute–and someone who knows what they’re doing. Unforeseen disasters have ruined farmers for life. Don’t jump without a parachute!

The number one reason farmers purchase crop insurance is to sleep better at night.

Farmers work hard. Their bodies need (and deserve) at least 8 solid hours of sleep every night. And knowing that your home, livelihood, and family are protected is one of the best kinds of sleeping pills there is. Those Restless nights of lying away wondering how you’ll make ends meet go away when you know the worst-case scenario can’t hurt you.

A bad day in the field is better than a good day in the office.

Farmers are a different breed. There’s something about the personalities of those who work on a farm that just live for the outdoors. They’d rather be out in the fresh air and sunlight fixing a tractor or planting corn than be cooped up in a cubicle all day. You can’t beat working in nature. And few will ever know that joy like a farmer.

It isn’t the farm that makes the farmer. It’s the love, hard work, and character.

I love farmers. They work hard and they love what they do. There’s a nature in them that says, “If I want more, I’ll work more. It won’t be given to me.” It’s a noble profession, and I believe everyone should work on a farm once in their life. If you want to build character, build a farm.