Year in and year out managing risk is a major part of farming. And then there’s 2022. Although prices for most major commodities have been at near-record levels, rising input costs are forcing farmers to question every decision they make.

That’s been the case for David Nichols, a corn, soybean and winter wheat producer from Ridgley in west Tennessee and one of the presenters on a farmer panel for the U.S. Soybean Export Council’s March 31 Planting Intentions Webinar.

“One of the common denominators here is those early purchases,” said Nichols, referring to comments by producers Tim Bardole of Iowa and Jim Douglas of Indiana on the panel. “As we saw these prices starting to take a turn and availability starting to be an issue, I got busy in the marketplace and accessed a lot of these crop protection chemistries we use.

“We’ve seen some of those go up 400% and 500% in cost from over a year ago. These are unprecedented times from the inflation side of things, and we wanted to get these products in house as soon as we could.”

Risk reduction

Nichols said Federal Crop Insurance is another tool that is becoming more important in a year when adverse weather, an equipment malfunction or simple bad luck can cost farmers dearly. “We’re trying to use our Federal Crop Insurance programs to help shore up some of that risk, as well.”

Shifting crop acreages is another form of risk reduction.

“In my operation, the increase in soybean acres is one of the ways we’re managing risk,” he said. “Our environment is a little hotter and dryer, and soybeans are a safer play for us. That’s helping us reduce some of that weather risk. And the good (Chicago Mercantile Exchange) board price also helps with that.

“Timeliness is also a way to mitigate risk,” he noted. “We make it a point to have all the equipment ready to go so we can be as efficient and timely as we can in getting this crop in and taking care of it throughout the season.”

“Every year the risk is different,” said Bardole, who farms near Rippey, Iowa. “The past two years we have paid for fertilizer much earlier than normal. Last year at this time is when we bought the anhydrous for nitrogen (for 2022), and not much later we did the P and K. A lot of it is watching the market and having the people on the supply side tell you when it’s going to be tough.”

Storage investments

Over the last few years Douglas, who farms near Flat Rock, Ind., has invested in on-farm fuel storage, fertilizer storage and grain storage.

“We weren’t thinking about this kind of an event to drive that, but we did think it was prudent to have those under control and have some flexibility when you buy those inputs,” he said. “With our hog operation we’ve always considered it a diversification on the income side. We never thought it would be quite the value on the input side with the hog manure as fertilizer as it is now.”

To view the entire webinar, visit https://www.youtube.com/watch?v=pgBQny6Nxr4.