Good Farm Management Key To Profitability

Good farm management often is the difference between profit and loss, with a knowledge of production costs and crop insurance the keys to good farm management, said a Farm Credit Services of America survey.

FCSAmerica, a financial cooperative owned by agricultural producers, announced the survey results on its website.  The results shed light on the practices of grain producers who said they were satisfied with their marketing results.

The survey offered an opportunity for farmers to compare themselves to their peers and examine their own approach to marketing.  Many, if not all, farmers have worked to lower their operating costs, but the survey offers insights about how to optimize their income.

Nearly 650 producers in nine states responded to the survey, revealing that about a third are mostly or completely satisfied with their marketing practices and results.




One-third of producers were mostly or completely satisfied with their marketing practices and results.

More satisfied than dissatisfied producers said they had a written marketing plan, possessed a very good understanding of their cost of production and use it in setting an initial price goal.

Satisfied producers were more likely to price as soon as they see a profit and to price multiple crop years.  They also were more likely to price a quarter or more of their expected crop before planting.

They were less likely to sell most of their crop right after harvest, price when they need cash flow or price when fear of still lower prices sets in.

More satisfied producers said they used futures hedges and locked in the carry on stored grain, while dissatisfied producers were more likely to use spot cash sales, cash contracts and put option purchases.

Dissatisfied producers also were more likely to say they don’t understand how to use available marketing tools, and more than a third wished they had a mentor.

More than 20% of dissatisfied producers said they studied marketing in college but didn’t understand how to use the various tools in their operation.  Sixteen percent said they understood futures and options but didn’t have confidence using them.




On average, producers used four to five marketing tools.

The most popular marketing tool was storage, used by 82% at least occasionally; one in five always stores.

Cash-forward contracts and spot cash sales were used by more than 2/3 of farmers.

Only about a quarter of survey respondents used futures or options.

Almost 2/3 priced in small increments; only 5% went for the “home run” and priced a large portion at a time.

Almost ¾ of producers said they had a good understanding of their cost of production, although a smaller percentage used it in setting a price target for marketing.

Seventeen percent have a written marketing plan.




No trade was reported on the livestock exchange video auction last week amid more technical troubles.

Cash cattle traded Tuesday at $132 to $133 per cwt on a live basis, down $4 to $5 from the bulk of last week’s action and at $215 dressed, down $3 to $5.  Some reports have last week’s cattle being sold for the first week of July.

The USDA’s choice cutout Monday was down $0.38 per cwt at $249.46, while select was up $1.56 at $221.36.  The choice/select spread narrowed to $28.10 from $30.04 with 69 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Friday was $150.18 per cwt, down $0.89.  This compares with Monday’s Aug settlement at $145.00, down $2.87.