WOODWARD, Iowa — No one has to tell Rod Pierce that corn and soybean prices are low. He can see that on his computer screen every day. What will make his ears prick up is if you can tell him how to still make money.
“I think you really need to know your cost of production,” Pierce says. “And you need to know your cash flow.”
It’s an idea echoed by agricultural economists and farm management experts.
“Just knowing your cost of production is key,” says University of Illinois agricultural economist Gary Schnitkey.
Too many farmers know the average cost of production figures put out by the university. But not enough know the cost on their own farm, Schnitkey says. No matter what way you figure it, cost of production has gone up in most cases in 2019.
Schnitkey says increases in fertilizer, especially for nitrogen, has been the big factor in the 2019 increases. For those applying anhydrous, the number went up dramatically this spring, thanks in part to the fact that very little N was applied last fall due to wet field conditions.
Pierce doesn’t hold himself up as any kind of expert on the subject of farm management or cost of production, but he and his son, Bret, do work with a team of advisors as they try to keep their central Iowa farm in the black. And they say that task has gotten more challenging in the past several years, as crop prices have slipped and input costs have continued to rise.
Pierce joined a study looking at cost of production for a number of individual farmers to see how he compared. That has been helpful, he says, because most farmers think they are doing things right until they see that there are other people in similar circumstances who are doing a better job of either controlling costs or marketing their grain.
This year’s tough economic situation meant that Pierce and his son looked at a number of ways they might improve the bottom line. For example, he says they are taking a close look at whether specific treatments, such as fungicide, are necessary. They are also side-dressing most of their nitrogen, a move he says should allow them to target their application for when it is most needed by the crop.
They also aren’t afraid to go to specialists at Iowa State University to fine-tune either marketing or crop production plans. And things like variable-rate planting can be handy for reducing seed costs. In some cases, seed populations could be reduced in parts of a field and increased in others.
“We scout our fields often,” he says. “And we have a team of people to help us.”
That process of looking closely at the bottom line and evaluating it will continue into next year, Pierce says. The family will evaluate everything it buys and consider ideas ranging from skipping a year of fertility treatments on some fields to reducing or changing the number of field passes. Insurance costs and marketing will also be reviewed.