Farm Progress

They’re using data, bid sheets and negotiation to get better deals on inputs.

Mike Wilson, Senior Executive Editor

October 29, 2018

7 Min Read
Even if you’re friends with suppliers and dealers, “sometimes you have to pull an order, and that’s one of the hardest parts of farming,” says Indiana farmer Eric Wappel.Mike Wilson

Eric Wappel doesn’t mince words when it comes to his 2019 buying strategies.

“This year I’m telling them what price I’m willing to buy seed corn at, and if they’re not willing to meet that price, I’ll go someplace else,” says the North Judson, Ind., grain farmer. “We decided that buying seed early for discounts doesn’t matter either because we still get those discounts, mainly through negotiation.

“I was a seed dealer for a few years, so I understand about their margins,” he adds. “And FBN [Farmers Business Network] helps with transparency. You can see every manufacturer of chemicals, generic or otherwise, plus pricing.”

Why the tough stance? Like many farmers, Wappel’s input buying is now emboldened by data. This analytical approach comes at a time when grain farmers are setting up budgets that include higher input costs, lower prices and razor-thin margins.

Granted, the Wappel operation — father Larry with sons Eric and Larry Jr. — are dealing from a position of strength with several thousand acres of corn, soybeans and seed corn, along with a substantial mint enterprise. But even without data or volume discounts, there’s little that’s warm and fuzzy to this approach.

“We price-check everything, because in the end, farming is a business,” Wappel says. “We have friendly relationships with suppliers and dealers; you like these guys, you go to dinner with them Saturday night. But sometimes you have to pull an order, and that’s one of the hardest parts of farming.”

Nutrient efficiency

The last four years of lackluster incomes have forced grain operations to ramp up efficiencies, especially with nutrients. “Looking back, we threw whatever we needed out there when corn was $6,” Wappel says. “Now that every dime and nickel per acre counts, we sharpened the pencil on nutrients and changed how we do business.”

Fort Dodge, Iowa, farmer Dave Nelson also takes a fresh look at fertilizer spending, maximizing nitrogen efficiencies with split applications and ramping up biologicals. On corn ground he applies 100 units of N per acre in fall, followed by another application at planting, and the balance with a Y-drop high-clearance application in-season, based on crop needs.

“Sure, the cheapest way to buy nitrogen is fall anhydrous, but when there’s a 10- to 20-bushel difference in favor of spoon-feeding N throughout the growing season, we’re fooling ourselves with a full rate of N applied in the fall,” Nelson says. “With 60% of nitrogen used by the corn plant at tassel stage, how can we expect it to all be there come July when we applied it 10 months prior?”

Nelson says biologicals — which he applies by variable rate (both broadcast along with in-furrow at planting) based on soil type and soil tests — help unlock the tied-up nutrients present in soils. It changes how plants respond to different problems, like high pH or iron deficiency chlorosis.

“We are finding that the biologicals are unlocking the tied-up nutrients and making them become available, so we are managing fertilizer costs in conjunction with biologicals and seeing up to a 5- to 8-bushel increase in soybean yields over two years,” he says. “Using biologicals in corn is showing just as good of a result as soybeans, so our plan is to continue the implementation of biologicals in a much bigger way in 2019.”

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“The multiple years of data that we can normalize on each field is allowing us to take the hesitation and emotion out of our decision to drop nonprofitable farms,” says Iowa farmer Dave Nelson.

Cost, expertise or both?

If you’re putting together a shopping list for 2019 inputs, know what services and expertise you will need versus just price shopping.

“When you become just a cash-and-carry customer, the progressive retailers who you want to be your business partners won’t give you that level of trusted advice you need in your operation,” Nelson says. “Retailers have learned how to charge for their services, as they are in the business to make money as well.

“Too many times we try to save 25 cents on a gallon of chemical when it would be time better spent working on our marketing, or benchmarking profitability on each farm that we operate,” Nelson says. “Retailers are learning that if they are bidding for your business, you may get a bid but not their expertise. We all have to make money in this economy, so when you make your input purchasing decisions, understand you will be getting what you pay for.”

Using variable-rate applications, Nelson built a spreadsheet and developed management zones to learn profit margins on each acre. He benchmarks all fields against each other and ranks all farms on net income.

“Just like you cull cows, we’ve given up some ground that’s always at the bottom due to poor drainage, poor fertility, location from home base or just simply too high cash rent,” he explains. “When we had $6 corn, you’d farm pretty much anything, but now that’s changed. The multiple years of data that we can normalize on each field is allowing us to take the hesitation and emotion out of our decision to drop nonprofitable farms. It makes for a pretty easy and confident discussion with the landowner when you can show him or her multiple years of data on the farm and how the profitability is not there.”

Belle Plaine, Minn., farmer and seed dealer David Woestehoff often uses a bid sheet to shop and compare prices and services. He also uses a third-party independent lab to do soil analyses, and then hands that information off to fertilizer salespeople and applicators. He buys local but works with a buying group many miles from home.

“With chemicals, I try to buy a couple products cheapest from the co-op, the balance from another local supplier, and maybe two or three other products from the buying group,” he says. “I do that because at least then you can put together a budget and know how much you are going to spend when you try to project cash flow.

“I might spend $50,000 with the buying group, but I also like to support my local co-op,” he says. “If I have all corn herbicide bought from 300 miles away and it gets late in the season and we need to switch chemistries, it’s good to have something bought locally so I can call them to get product and make timely applications.”

Woestehoff says he gets his best chemical prices from harvest through first week of January. He takes advantage of prepay discounts. He shops local suppliers and brokers for fertilizer, weighing cost savings and application services.

“I can save $10 a ton putting on my own fertilizer, but when I factor in the time and management it takes to run my own spreader, I’m better served putting that energy into tiling or some kind of land improvement,” he says. “In my operation, we usually harvest right up to Thanksgiving, so we don’t have a lot of extra time to apply fertilizer. I like to hire someone to do a lot of that work for me.”

Woestehoff says he grew a fair amount of biotech corn years ago, especially to protect against rootworm in corn-after-corn. But with more farmers returning to a 50-50 rotation, he’s seen less rootworm pressure. The lesson: Don’t buy biotech traits if you don’t need them.

“I save $50 a bag on seed,” he says. “If you don’t have corn rootworm pressure, don’t buy a trait that offers that protection. It will just cost you money for protection you don’t need. You have to be in tune with an agronomist or seed dealer who is in the know about those issues in your area to make an intelligent decision.” 

About the Author(s)

Mike Wilson

Senior Executive Editor, Farm Progress

Mike Wilson is the senior executive editor for Farm Progress. He grew up on a grain and livestock farm in Ogle County, Ill., and earned a bachelor's degree in agricultural journalism from the University of Illinois. He was twice named Writer of the Year by the American Agricultural Editors’ Association and is a past president of the organization. He is also past president of the International Federation of Agricultural Journalists, a global association of communicators specializing in agriculture. He has covered agriculture in 35 countries.

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