Farm Progress

Farming fundamentals critical in 2009

Jim Langcuster 1

March 25, 2009

2 Min Read

Two economists say that if there is one take-home message in this crisis-ridden crop year, it's that fundamentals count more than ever.

Any seasoned farmer who successfully weathered the last big crisis — the farm crisis a quarter century ago — probably understands that better than anyone, they say.

"It's the little things — taking care of yourself and your equipment and making sure your finances are in order," says Max Runge, an Alabama Cooperative Extension System economist.

"Farmers need to watch those factors to make sure everything is in order."

It was this sort of close attention to fundamentals that got farmers through the last big crisis in the 1980s, Runge says, adding that this approach, more than any other, is what will get farmers through the present crisis.

What are some of these fundamentals?

At the top of the list is management — namely, "setting goals and getting a clear idea of all the costs that will ultimately be invested in the 2009 crop," Runge says.

He says farmers should have a clear grasp of what everything will cost as well as the variable factors that need to be carefully monitored and maintained.

"We want to spend as little as we need on our equipment and other factors to avoid bigger expenses later on," he says.

Next, is soil testing.

"This is an Extension recommendation that goes back 100 years," Runge says. "But it's becoming an even more critical tool, especially now that fertilizer is going up, along with the money we have invested in fertilized crops.

"To save on costs, we soil test to ensure the crop gets only what it needs."

Add to that insect scouting and the careful timing of chemical applications.

Storage is another factor that should not be overlooked, Runge says.

"Storage may be one of those factors that could pay a lot, providing farmers have a place to store their commodities," he says.

Runge's colleague, James Novak, an Extension economist and Auburn University professor of agricultural economics, says corn and especially soybeans seem to be the most lucrative commodities in 2009.

Along with other key management decisions, Novak recommends paying close attention to an often overlooked factor — climate. Visit www.agroclimate.org for more information about climate predictions in 2009 and how to base farming decisions accordingly.

Crop insurance is another critical factor this year, Novak says. Producers need to consider contracting as well as using insurance to backstop contracts.

In fact, crop insurance coverage is now one of the requirements associated with farm program participation, Novak says.

Novak says farmers should avoid excessive speculation this year and play on fundamentals: Weather, supply and demand, government program support and contracting.

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