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Corn+Soybean Digest

Filling Up

Skyrocketing prices last year led Gary Porter to rethink his approach to laying in diesel fuel supplies.

“We used to try to get it all done in one deal,” says Porter, who along with wife, Lori, grows soybeans and corn on 4,000 owned/rented acres in northern Missouri and southern Iowa. “But now we approach it more like marketing our grain crop. We don't aim to get 100% locked in at the very top of the market. We try to get some on the way up and some at the top. And then we live with how it averages out. It has served us pretty well.”

In years past, Porter tried to lock in a price for a full year's supply of diesel fuel in December and January. Typical price was about 80¢/gal. Last year, with prices moving steadily upwards during the winter months, he opted to delay locking in early. “We waited to see if the price would come down,” says Porter. “In April we got a call from our supplier. The price was $1.36/gal. We thought it would probably go down. So we decided to wait.”

End result: Porter bought his fuel on an “as needed” basis throughout the cropping season. “On average, we paid $2.18/gal.,” he says. “The high point was $3.20/gal. We use about 7,500 gal./year. If we had locked in at the $1.36 price, we would have spent about $10,200 (compared to $6,000 the year before). As it turned out, our total fuel bill for the year was more than $16,000. It was a big hit.”

This year, Porter started shopping hard for diesel fuel among four suppliers right after he wrapped up the fall harvest. His goal was to get about 50% of his fuel locked in during December and January, 25% in February and another 25% in March. “The tricky part was dealing on delivery terms,” he notes. “In the past, we'd get one truckload delivered for the entire season. That made things pretty simple. Buying at several different times during the year could make it a little more challenging.”

Some of the other areas where Porter is looking to trim input costs:

  • Fall tillage

    V-tillage in the fall has been long-standing practice for Porter on about half of his tillable acres. Last year, he ran the subsoiler on only 1,000 acres. “There wasn't really that much of a benefit to doing the fall work,” Porter says. “Not doing it will help us reduce our fuel use. And we'll also save on labor and on machinery wear and tear.”

  • Seed purchases

    Porter tries to buy most of his corn and soybean seed early and from one company to take advantage of discount offers. Last year, he got a 7% discount for ordering seed by Dec. 1. Because he ordered the bulk of his seed from one company, he qualified for an additional 16% volume discount. “It seems like you have to make decisions earlier every year,” says Porter. “When I first started farming, we wouldn't buy seed until a couple of weeks before planting. Now we find ourselves working on that during the harvest.”

  • Fertilizer purchases

    Anhydrous applications have traditionally been a springtime chore at Porters. But predictions about a likely jump in fertilizer prices for the year ahead convinced him to do a post-harvest anhydrous application on 25% of his acreage last fall. “We had the time and the weather was perfect for it,” says Porter. “With everybody talking about prices going up, it seemed like a good move.”

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