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Budgeting, marketing play key roles In 2009 crop production planning

Kenneth Wright spent a lot of time this winter poring over figures, trying to find ways to match production cost cuts with what’s likely to be a 15 percent income reduction from a Hunt County, Texas, wheat, grain sorghum, corn and soybean operation.

He and son Kendall also will watch markets closely, closer than usual perhaps, looking for opportunities to lock in a profitable price.

“Typically, we forward price about 80 percent of our wheat crop,” Kenneth says. “We contract in steps, a little at a time throughout the year. I think we may see an opportunity to sell $6 wheat, but we have to watch for it.”

Kendall, who handles most of the marketing chores while his dad handles budgets, says an independent broker, Chad Hobbs, helps with marketing. “I’ve worked with Chad for six years,” Kendall says. “I’m on the phone with him four or five times a day.”

They sold wheat back in the fall for just over $8 a bushel. “I wish we could get that now.” He’ll watch for other opportunities. “Marketing is extremely important this year."

He and his dad participated in a Texas Extension Service Master Marketing course several years ago and both say the experience taught them a lot about selling commodities.

“I enjoy the marketing. It’s a challenge and I keep up with it every day,” Kendall says.

Budgeting is a challenge, too, says Kenneth, especially when he has to find ways to maintain income with grain prices fluctuating as they have the past year. “Wheat price is off,” he says. Corn, grain sorghum and soybeans are also down from their peaks, leaving that 15 percent gap in income projections.

He says fertilizer costs, over all, will be up for the year, though prices have dipped recently. “Compared to this time last year, fertilizer expense is up 30 percent to 35 percent,” Kenneth says. “The biggest change is with 10-34-0. We’re using more urea this year; it’s a little cheaper. Although 34-0-0 (ammonium nitrate) is the Cadillac fertilizer and works faster than urea, with 30 degree temperatures we don’t see much difference.”

“We’ve never seen much difference between ammonium nitrate and urea on wheat,” says Jim Swart, Extension integrated pest management specialist at Commerce, Texas.

Kenneth says if 32-0-0 goes higher, he’ll use urea on corn and milo. “I’ll apply it before planting and then harrow it in and sidedress.”

He’s cut rates on the 10-34-0 he’s using from about 10 gallons per acre to 4 to 5 gallons. “I’m not using as much phosphate as last year, but I’m putting it in the row,” he says.

He sees one bright spot, a reduction in fuel costs from last year.

About half of the Wrights’ cropland is in wheat, some 2,400 acres. Variety selection was important last fall as they looked at potential production costs. Part of the acreage is in Pioneer 25R47 and part is in Terral LA 841. “The 841 acreage will not need a fungicide,” Kenneth says. “We’ll spray 25R47, depending on the weather, around the first of April.”

Variety selection is a key,” Swart says. “With 841, we don’t worry about disease pressure because it has shown good resistance to both leaf and stripe rust.”

Swart says wheat farmers have a new fungicide option this year. “Tebuconazole (sold as Folicur and TebuStar) was labeled for wheat last year. We’ve been testing it for a long time and it will be inexpensively priced this year. I’ll recommend it.”

Kenneth says he and Kendall will plow more than usual this year “because of the cost of glyphosate. Price has come down some but we are doing some tillage. We’re about 80 percent through.”

He figures his budgets conservatively, relying on Farm Service Agency price projections and a conservative yield. “The FSA wheat price might be a little high,” he says. He’ll base yield estimates on his five-year average, close to 40 bushels per acre. He figures break even for wheat this year will be “just under $5 a bushel.”

He thinks harsh winter weather may make $6 wheat possible. “Winter kill further north is a possibility,” he says.

He and Kendall farm in partnership and each has a sideline business. Kenneth does bulldozer work and Kendall and a cousin, Blake Douglas, have a custom applicator business.

“Kendall just bought a TerraGator.” He’ll add auto-steer technology to it to prevent overlapping.

GPS technology will be a priority in the next few years. “We hope to go to a strip till system some day,” Kenneth says, “and we’ll need auto-steer to do that.”

Kendall says the custom applicator business keeps him busy. He got out for a time and concentrated on the farm operation. He and Douglas started up again last year and are applying fertilizer and spraying.

“We have a new John Deere sprayer coming in,” Kendall says. “It has auto-steer on it. The TerraGator has a guidance system, but there is a lot of difference. Accuracy is so much better with auto-steer.” He says swath control makes a difference with spray accuracy.

In mid-January he was trying to finish custom work so he could get back to his and his dad’s farm. “We don’t have nitrogen on any of our wheat,” he says.

The custom application business has been a good “supplementary income. It supports my farming habit,” Kendall says.

Douglas says with the 60-foot boom they can cover as many as 1,200 acres a day, if everything runs smoothly. “We may get 1,200 a day but probably average 700 to 800.”

Kenneth says most of their wheat crop looks good. He and Kendall will finish out their cropping scheme with 975 acres of milo, 1,061 acres of corn and about 500 acres of soybeans.

The soybean acreage will help cut costs. “We have some sandy land we just rented and it has Johnson grass, which is not suitable for corn. We can put in soybeans and cut production costs.” He says the rotation helps with wheat production, especially with ryegrass problems.

Kenneth says he and his son will do little out of the ordinary this year, no drastic cropping changes to cut costs. They’ll tweak production expenses where possible, watch markets even closer than usual and make the best yields they can.

“We’re doing what we always do, just a little closer to the vest,” Kenneth says.


TAGS: Management
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