Remaining Profitable with Rising Input Costs
Farmers, hit hard over the last several years, have been left wondering how they can remain profitable while coping with rising input costs.
“When they can, farmers are having to start considering cuts on the inputs side, just due to tighter markets,” said Will Maples, assistant professor in agricultural economics at Mississippi State University. “As we come into this year, though, it’s getting hard to make more cuts.”
Although farmers are feeling the economic squeeze, there are ways to implement cost savings that protect the farm for the long haul.
Common Inputs to Cut
Start by evaluating where you can save, including fuel, equipment maintenance and seed.
Farmers may consider cutting some inputs, such as fertilizer application, as they seem to have limited repercussions upfront. However, farmers should be sure cuts aren’t made in areas that can hurt production long term. For example, limiting pesticide applications is sometimes considered, but it may also have an immediate and lasting negative impact.
“From what I’ve seen, cutting areas like lime and nitrogen means you’re giving up some of your available fertility and nutrients,” said David Lowery, corn and soybean farmer from Mazon, Illinois. “However, it’s hard to measure what it’s doing to your soil and crop. You don’t necessarily share your yield maps with your next-door neighbor who has different fertility levels.”
It might be easy to hide cuts on some fertility management inputs. But when it comes to pesticides, farmers will eventually see adverse effects. Most notably, resistance in their fields can make applications more costly down the road. Additionally, farmers should remember off-label applications are against the law.
Rebecca Wesemann, certified crop adviser with Advanced Crop Care Inc., said farmers should consider what cutting pesticides in year one will cost them in year three.
“When considering cutting their pesticide programs, farmers need to consider what their rotations are and how cutting rates will affect them in the long run,” Wesemann said.
Wesemann described how the costs can increase. “Say year one, a farmer plants corn first and budgets a maximum of $50 for their herbicide program, including pre- and post-applications. The next year, she plants soybeans and plans on $30 for soybean herbicides. She needs to evaluate the weed pressure from the first year,” Wesemann said. “If there is severe weed pressure, she’ll end up paying an extra $50 to $60 an acre to control weeds and still won’t have great control.”
Cutting rates within the label allowances and not applying herbicide treatment or tillage treatments whatsoever can affect the viability of certain weeds, allowing them to still grow. Wesemann said sometimes proper tillage can make a difference in positive weed management.
“If a farmer isn’t taking care of those weeds, the weed seed bank just increases. Now there is the potential of spending more money long term and having to terminate areas of fields,” Wesemann said. “In extreme cases, entire fields will be terminated.”
Expert Advice to Work Around Cutting Inputs
Cutting pesticide label rates is one of the worst places farmers can cut corners, Wesemann said. Rather than cutting rates below label ranges —which is against the law —farmers should consider dropping an application altogether if it does not benefit the field. She suggested farmers find out what pests are prevalent in their fields and keep a record of their field management history.
“If farmers have a lot of insect or disease issues or are planting soybeans for the first time in a couple of years, they should consider the field conditions the last time soybeans were grown there,” she said.
If there was considerable disease pressure, Wesemann suggested asking several questions:
• What type of disease was observed?
• How much did it impact yield?
• Would a different hybrid or varieties make a difference?
• Could a certain seed treatment improve the situation?
“Consider managing each field separately to figure out the best course of action needed,” Wesemann said.
There are options for seed treatments, ranging in price. Much depends on when that seed is planted, weather conditions and field history. If farmers plant in colder weather, Wesemann advised them to apply a seed treatment. If they are planting in warmer weather, she doesn’t think it’s worth the money.
“If a farmer has picked a hybrid that works for their fields, then the need for more seed treatment might not be worth it,” Wesemann said. “Standard seed treatments are necessary. Knowing your field history might make a difference in purchasing a $20 treatment versus a $40 treatment.”
Wesemann said this also holds true for pesticide applications —specifically fungicides.
“It doesn’t make sense to apply a fungicide when a farmer knows they don’t have disease issues in the field. If a farmer sprays before their economic threshold is met, that causes even further concern for resistance,” Wesemann said. “It’s all about knowing the pressure in the fields. Spraying isn’t always the answer.”
Insecticides are a different story. “I am a firm believer in spraying insecticide during reproductive stages,” Wesemann said.
Farmer Experience with Cutting Inputs
Lowery has been experimenting with ways to cut certain inputs on his farm.
“We have been working on ways to save some money,” Lowery said. “And from what I’ve found, if you can do your own spraying, start shopping around for generic chemicals. You have to work a little harder to mix them since some herbicides are often not available premixed.”
Going the generic route with pesticides can save farmers a lot of money. However, farmers must make sure they are not cutting the number of active ingredients —specifically with herbicides. When applying fungicides and insecticides, farmers should use an effective mode of action for the issue they’re targeting rather than using multiple modes of action.
A good rule of thumb is to remember to rotate premixes among effective herbicides with different sites of action to delay the development of herbicide resistance. Farmers should keep a record of which pesticides they are using each year, so they are sure of the premixes used.
Farmers interested in learning more about active ingredients and modes of action for herbicides, insecticides and fungicides can review the Take Action classification charts.
“If farmers are going the generic route with pesticides, I would make sure they understand how to read a chemical label. Not all products are comparing apples to apples,” Wesemann said.
Lowery said that applying a residual can also benefit farmers in the long run, saving them money overall.
“I know there are many farmers who don’t understand the importance of residual herbicides. I see and hear about it quite a bit,” Lowery said. “Farmers will apply an herbicide without a residual, and then see waterhemp pop up a month later. They’ll usually go back in and reapply a herbicide to that waterhemp, which costs them more money.”
Wesemann agreed and said many growers could lose yield if they do not have a residual upfront.
“Many farmers still do not apply a pre-emergence application to their soybean crop,” Wesemann said. “When there is weed competition during the reproductive stages, money and yield are being lost.”
It’s critical to note that farmers considering applying their own pesticides should review all labels carefully. Continue using fully labeled rates of pesticides, proper nozzle tips, water quantity and pressure. Also, apply herbicides, insecticides and fungicides in rotation or mixtures to avoid the resistance.
Ultimately, Lowery said if farmers are trying to save money, they should try to be as self-sufficient as possible. He suggested farmers work toward applying their own herbicide and fertilizer applications.
“I would suggest farmers try and do as much as they can on their own,” Lowery said.
Relationships, Records and Rates Matter
There are opportunities to save money out of the field as well —starting at the bank. A strong relationship with your banker is crucial today. Maples said gone are the days when you just go to your banker to get your operating loan.
“In this economy, you need to have a good relationship with your banker to get your operating loans and have the capital to fund your operation,” Maples said. “Farmers should also consider shopping around for interest rates. Talk to the seed, pesticide and chemical companies about what kind of in-house financing they have.”
Maples recommended farmers pay close attention to what’s costing them the most money, especially as they start to make decisions on possibly cutting inputs.
“Farmers need to be on top of record-keeping and knowing their real costs,” he said.
Wesemann agreed and added farmers should watch economic thresholds as well.
“Right now, prices are low. If growers are on the fence about spraying their fields, they should consider if the insects will cause yield losses equal to insecticide and application cost,” she said. “If there is no yield loss, and it isn’t something their field needs, I would suggest they cut the application out entirely.”
If farmers are struggling to afford inputs needed for sound management, they can consider calling their local co-ops, crop advisers or extension agents for advice.
“Although tight markets remain a concern, there are choices that will help farmers protect their crop and maintain profitability today and in the future,” Wesemann said.