Headlines Hit Home

I will be the first to admit that the main newspaper I pick up is my local paper. There are often great stories about upcoming events and things that have taken place in our community. Of course, one of the most entertaining sections of the paper is the Sheriff's Report. I also catch "news" headlines in a variety of place: Facebook, Twitter, Fox News, CNN, newsletters and such. I am always surprised how there can be so many different stories about the same situation, event or trend. What makes one person see something in a completely different way than another. I have decided that it come down to a few basic principles:
* marketing
* personal experiences
* personal beliefs
* motives
* effort into unfolding the truth

While doing some reading over the past week the light bulb came on.... I, and I will dangerously venture to assume, and many others don't distinguish between correlation and causation. Ok, I know deep stuff, but it is true! If we look at illness or even food/ eating trends there are 1000's of headlines that scream at us to believe things like "Sugar is Killing us!" "Gluten is Making us Fat" and "Hormones in Food Advance Puberty". All of these headlines trick our brains into jumping on a bandwagon without taking time to ask.... is sugar really causing death (causation) or do some people who consume heightened amounts of sugar and some people die from health issues (correlation) or does gluten in wheat products truly cause obesity (causation) or do many people eat excess amounts of highly processed foods, which are often products containing wheat, and are some people carrying excess/ unhealthy weight (correlation). And to be quite honest, there are and have always been hormones in everything we consume- yes, even the lettuce we grow in our own gardens! I am pretty much an open book. So, I will admit that a few years ago I was shocked to find that all food and plants carried hormones and that I consumed them every day for over 30 years! I was a critic of hormone use simply because I didn't know any better.

Headlines drive me crazy... but there are some fabulous writers and marketers out there! They do their job well. As a mom, farmer, wife of a farmer and a life long learner I am always seeking out new information. I want to make sure that I am making the right choices for my family and for ensuring quality process and product on our farm. All decisions are generally well thought out, some just come a little easier than others. Somethings are complicated and others are not.

I too fall victim to the big bold letters and catchy three to six line phrases that often send our brains spinning and into defense mode. My only resolution to the talented media and marketing experts is to simply ASK QUESTIONS. Have questions about food or things we do in farming and ranching? Ask those who work in those areas each day. If we don't have the knowledge in the area you ask about we will help you connect with people who do!

As for me, I am an open book. I hope to share why I do what I do on my farm and with my family. So the invitation is open.... GATHER YOUR QUESTIONS AND ASK AWAY!

When Does Farming Begin Each Year?

Have you ever wondered when the "new" farming season begins each year? Well, each operation and each year will bring a different answer. Here are some of the most common...
1) A year or two ago
2) Right after taxes are done
3) It doesn't
4) Work begins about 2 months before planting

Why so many different answers? Let's go answer by answer staring with #1.

1) For many farm operations the 2013 farm year really did start several years ago. Farming is a business. If a business is to succeed it needs to have long term goals, a planting and harvest plan, as well as a marketing plan. In addition there needs to be a plan about budget- including machinery purchase, insurance, and employees. Finally, there is also a need for a plan to accomplish all of the goals and plans listed above. None if this can be started and set in place in a short amount of time. They all take time and generally start and are modified anywhere from 3 years to 6 months before they become a reality.

( PICTURE FROM www.noble.org)
Another reason that the 2014 farming year started quite a while ago is because many farmers sell crop for an upcoming year as early as two years before it is planted. If prices are right and other variables are fairly secure, it is in the farmers interest to lock in a fair price for a portion of their crop.

( PICTURE FROM www.atlanticbt.com)
2) Taxes... Yes, farmers pay taxes. Most of us pay taxes once a year sometime between February and April, depending in the deadline given. Yes, farmers do have some deductions that individuals do not, but it can be compared to many other businesses. Business expenses do reduce the liability. But, I will tell you that I pay my fair share. Deductions are not always in our best interest to maximize and that is where the plans from above come into play. I will also state that I am proud to pay a portion of my income that is reasonable because it is my civic responsibility.

So, now onto the answer you have been looking for.... For many, farmer or non- farmer, when the taxes are finally prepared, liability determined and then paid, there is a feeling if relief and new beginning. That is why some day that the 2013 farm year starts after taxes.

3) It doesn't.... A year only starts when the previous stops.... Some years a farmer is functioning with some things from two years prior and looking and planning two to three years ahead. They all mesh together... which is exactly why detailed records are so important!

4) No farmers don't just park the combine in the shed in the fall and walk into the tractor cab and pull the seeder/ planter into the field and start all over again in the Spring. Farmers are constantly finding new equipment, searching for parts, attending trainings, and repairing and modifying equipment.

Repairing equipment can take as much as 8-10 weeks of regular full-time work. Many times parts and supplies have to be picked up from over 250 miles away. Some of the modifications require slow and steady welding and research in order to get things just right. The majority of farmers also have to truck their crop to local markets or elevators during the winter months. The time between harvest and Spring's work can be a bit slower and perhaps more flexible, but it is never dull!

In short, the coffee drinking donut eating days do not happen very often. If they do, they are not days they are a brief hour or so.

If I were to steal and modify a well known saying... It could be said, " A farmers work is never done." Just look at the text and call record of any farmer's cell on a given day.... I bet there is no less than 20 recorded calls or texts regarding the farm and perhaps percision farming software!

(PICTURE FROM www.farmworks.com)

A Minute Means Money... or maybe not!

There is never a minute that we should take for granted. I really do mean never taking a minute for granted in all aspects of our lives! Over the past few weeks I have had a crash course in grain contracts. Overall, I have learned that each commodity's contract is unique and pretty much just tells the seller that the elevator will take a specified amount of commodity.

On our farm we have been hauling wheat fromt he field to local elevators. Most of it has been contracted. These specific contracts bind both the elevator and producer to deliver and buy a certain number of bushels of wheat at a baseline price. Our elevators use 14 protein for their base contract price. This means that if you bring in a load of wheat you would get a bump or a premium above the price for proteins higher than 14 and a discount on the price if it is lower than 14 protein. Generally, once a producer brings in a load of wheat on a contract the price is set until the contract is filled. Some days a producer will fill several contracts. All of which will have the same premiums and discounts for protein because they are delivered on the same day.

Examples of how premiums are paid out are:
If 14 protein wheat is $4.00/ bushel for each .2 protein increase between 14 and 15 protein the producer would be paid an additional 20 cents. So, 14.6 protein wheat would be worth $4.60. When protein reaches 15 protein the producer would receive the 20 cent premium for each .2 and then an additional 75 cent bump. So 14.8 protein wheat would be $4.80 and 15 protein wheat would be $5.75. But, if you had wheat that was less than 14 protein you could be discounted 30- 40 cents. So if you had 13.2 protein wheat at a discount of 30 cents .2 protein then you would receive a discount of $1.20 for a price of $2.80 per bushel. ( Note: premiums are different at different elevators and on different days. They are generally set by supply and demand.)

Well, about 2 weeks ago, things as we knew them changed. We hauled a few loads of wheat into the elevator filling one of our contracts. Like I said generally the base price and premiums are set from open to close each day and do not change during the day. About 45 minutes after filling one contract, we hauled in another load. During that short period of time (thank you cell phones and technology :-)) the elevator had been given notice that South Dakota (a typical low protein state at about 12 protein) had shipped a load of wheat to Minneapolis that ended up being 16 protein. Thus causing an immediate decline in the need for higher protein wheat and the elimination of premiums for it.

So, when we went to dump on a new contract, we no longer had a premium for our high protein wheat. WAIT A MINUTE.... IT HAD ONLY BEEN A FEW MINUTES.... WHAT DO YOU MEAN? Needless to say there were a few unpublishable comments and several phone calls made to get to the bottom of the price difference. Yes, we know that premiums are a bonus, but they are important when we work hard to raise and plan for a certain percentage of our wheat to be higher protein. It is also important because producers often blend higher proteins with lower proteins to improve their price at market.

You may ask, "What really is the big deal?". Well, let's pencil it out.
If a field produces 45 bushels per acre and a producer raises 1000 acres of wheat that means there are 45,000 bushels of wheat.
Here is the price difference for the above protein premium scenario for the 45,000 bushels of wheat if 14 protein wheat were to be $4.00:
14 protein -$4: $180,000
13 protein-$2.50: $112,500
15 protein- $5.75: $258,750
WOW! That's a lot of money!

Ok, Ok, Ok. I know that not all of a producers crop would get the exact same price, but for princple, the difference is powerful. Many producers raise more than 1000 acres of wheat and do get quality premiums for raising higher protein wheat.
For our farm, literally the matter of just a few minutes, brought a deduction in income of over $30,000. More than I made working all year off the farm. I know I should know that nothing is for sure in farming; but, we get so comfortable with the way things are and have been that we often forget that they can change unexpectedly (and it is not always Mother Nature's fault)!

So, no matter what you think you know, what has historically been done, where things are trending in the markets, a simple change in supply and demand and circumstances out of your control can change the way you operate at any time.

Be thankful for what you have and never take anything for granted!