Our crop consultant does aerial scouting of corn with a drone. He has thrown it in free with our soil sampling charge per acre. For 2020, he wants to charge $3 per acre to fly the drone and share reports three times. Is it worth it? We farm 3,000 acres. Would we be better off buying our own drone and scouting ourselves?
Plastina: A $3 charge per acre for three flyovers and three reports compares favorably to the reported rates in the 2020 Iowa State University Cash Rental Rates Survey However, at a total cost of $9,000 for you, the major question is its rate of return. The same question applies whether you plan on buying a drone or custom hiring its services. The answer depends on how you use the reports, and your previous “free trial” experience should help you answer it.
One thing you need to take into account is the differential value of aerial scouting on soybeans vs. corn. Soybean plants are short, and scouting can provide information about weeds from planting to harvesttime. Corn plants, on the other hand, are tall and not much information on weeds is to be gained from aerial scouting after the canopy closes up.
Also, operating a drone requires training and practice, and in some cases even an Federal Aviation Administration drone license. So, if you see enough return on investment to justify a drone purchase, please check the local regulations to fly drones before making a purchase decision.
Stout: That seems a little steep for three flights, but with 3,000 acres, it could point out management changes that could either save or make you that much or more. If you have the skills, desire and time, you could purchase a drone and scout your farmland from the air several times during the season. If you see something in a field that doesn’t look right, then you would need to follow it up with in-field scouting and possibly some other testing. We bought a DJI Phantom 4 quadcopter with a camera for about $1,500, and I think it does a good job of seeing crops from the air. So, if you go the route of getting your own drone, just remember it doesn’t replace crop scouting, it just helps you know where to look further with boots on the ground.
Miller: One of the things to keep in mind with hiring help from outside the farming operation is that sometimes that help provides you with “hired labor,” as well as the hired service. Also, the owner of the service has already put in time and effort to get software set up, GPS systems synched, permits obtained, etc.
If you have lots of excess time available in your operation, you could explore purchasing your own drone and flying your own acres. However, it might pay you more to spend that time perfecting your marketing plan or monitoring your cows to make sure you don’t wind up with a bunch of open cows at weaning time (because you had a bad bull). Consider asking the consultant if he would cut his fees if you only have him fly your fields twice. You would have less information, but it would still be better than no information.
Missing marketing opportunities
Each spring we get so focused on corn and soybean planting that we miss out on good grain market rallies. What do you suggest for farmers on how to avoid missed opportunities?
Stout: You are not alone, the best opportunities for grain price rallies typically occur in spring and early summer, when we are too busy to pay close attention to the markets. To prepare, try to get an estimated breakeven so you know at what price the sale will be profitable. Then you could place offers with your elevator or grain broker to sell at regular intervals above breakeven.
Alternatively, you could have alerts set on your phone to remind you of the price to sell every week or put it on your office desk calendar as a reminder to keep regularly checking market prices and sell when in the black. This can help keep the emotion out of it, but you still have to pull the trigger and make the sale.
Miller: We have several customers who have turned to outside marketing services to help them get prices locked in during planting time. Usually we keep a list of brokers and marketing services that our customers have used in the past and provide that list to anyone looking for help. Then we suggest they talk with several of the people or firms on the list before making a choice. There are lots of different styles and systems out there to help, so it is important to find one you feel comfortable with.
These services always work better when you know your breakeven, so take the time necessary to calculate it correctly. If you have trouble, lean on your lender for assistance. Also, don’t forget to build into that breakeven price money that you will need for living expenses and equipment replacement. As a side benefit, our customers have discovered that having a marketing service watch the markets year round has given them some pretty good prices for the next year’s crop, while they are busy in the combines — another time of year when it might be hard to watch the markets.
Zhang: Unfortunately, the crop markets now face a great deal of uncertainty, but this highlights even more the importance of crop marketing, especially preharvest marketing. ISU Extension Ag Decision Maker has a series of videos called Crop Marketing 101 that discusses various crop marketing tools and strategies. But in general, there tends to be a spring rally in corn and soybean futures prices April to May, and it would be good to at least market and pre-sell a portion of your 2020 crops. The majority of grains in the Midwest are sold right after harvest when prices are the worst.
When you see a decent spring rally, taking an incremental approach and selling 10% each week when prices rise could be better than waiting for the highest price or waiting until this fall. The eight ISU Extension farm management field specialists across the state will be happy to work with you to help develop your specific marketing plan as well.