Based on surveys done by folks who care about such things, it is often said that farmers feel that marketing is the absolute worst part of farming. I’m guessing they didn’t ask about budgeting, because I just finished putting mine together for this season after having procrastinated on a “make new crop budgets” on a sticky note since harvest. Sweep auger to chase? Sign me up! Gates to haul? No problem! Assemble new-crop budgets…no thanks. Just the task of assembling all the facts and figures is sucky enough; but, even moreso than the past few years, it feels like asking for a beating as the dismal projection takes shape. Right now it just feels like we’re under attack – trade wars, ethanol battles, ASF, AOC/”Cow Grains”…
The numbers don’t exactly make for a party atmosphere this year, but now that I have them all put together, at least it feels good knowing what we’re shooting for, and I can make sales and enter #Targets with confidence. Also, while soybeans are somewhere between “exercise in futility” and “train wreck”, there is profit potential in corn around here. So, without further blah blah blah, here are MY* budgets for this year:
*IMPORTANT DETAILS (READ THIS BEFORE SENDING HATE-MAIL):
I can’t emphasize enough that these are “MY” numbers, so don’t get too worked up if they’re more or less optimistic than yours. I feel that nearly all of the estimates here would be accurate for most folks in our trade territory. After land expense, the majority of costs is inputs and, while I bought them from our company, I pay the same price you would pay. So, if you think those costs are low, give us a call at 800-235-5360!
Here are the places where I feel my situation would be most different than yours:
- LABOR: I put a big, fat ZERO in labor. I’m a very small farmer, so I mainly get help from four sources: A) my Dad and Grandpa, apparently they enjoy helping me for free, B) my wife – either she’s keeping an enormous tab, or she’s motivated by the thought of me whizzing away our savings, and C) my cousin, Shawn, because we share equipment so you might say “our interests in making progress are aligned.” For most of you who aren’t in the “wannabe” category like me, your labor bill won’t be zero.
- EQUIPMENT: I rent my equipment from an evil conglomerate (owned by me and Shawn). The rental company in turn rents the machinery from a 3rd party, and covers all the consumables: fuel, maintenance, repairs, and some upgrades. We are 100% no-till, so we need very little equipment, and what we run isn’t new, but has been well-maintained. I have done a little shopping around, so if I needed to buy my own, I’m confident I could finance and operate my own line of equipment for a similar figure. My equipment cost would probably increase somewhat, but in the longer run I expect to spread it over more acres.
- FAMILY LIVING EXPENSES: One of the benefits of being in the wannabe category is that my wife and I have “townie” jobs that cover our family living expenses, health insurance, etc. To be honest, in this environment I think it would be downright frightening for a small/mid-sized farmer to try and support a family without an off-farm backstop.
- LAND: Thankfully I have opportunities to rent land from family members, and the majority of it is on a share-crop basis. However, the tiny sliver of dirt I farm that Janel and I own consumes about $225/acre in interest expense (per tillable acre – half the parcel is timber/pasture). I realize that some folks are still paying $300+/acre in this neighborhood, but presumably they’re renting 225+ BPA dirt…or they just don’t enjoy the burden of equity…
- DEBT SERVICE: Since I rent my equipment and the majority of land I farm is rented, I don’t have a huge nut of principal payments to meet each year. There is some interest and cash rent figured into this budget, but I’ve not made any allowance for the additional cash flow needed for principal payments. If/when I expand my acres, I will have to confront that reality.
- PROFIT (LOSS): The P/L figures I show in these budgets simply reflect what you’d get if you could simply sell all of your anticipated production at today’s prices. Besides the fact that I already have some sales in place, I’m not ready to sell it all today. We’re just entering what has typically been the best time of year for profitable sales opportunities so I’ve got my targets working, and I’ll keep working my targets throughout the next +/-60 days. Everyone has their own profit goal, so you have to figure that out for yourself. For some help in that area, check out these free marketing calculators provided by White Commercial:
So there you have it! I would be glad to share my spreadsheets with anyone interested, and I would really appreciate feedback on things I missed or that could be improved. Am I going to make any money farming this year?…let’s just say there’s a chance…