My previous company announced a theme for sales season every year, and I took this idea to our family business.
“Simplify” was the 2013 theme I announced in my farm blog. That year, we tweaked some operations to capitalize on profitability. We sold our expensive large square baler and switched to all large round bales. We also planted more corn after corn and streamlined the way we work and vaccinate cattle.
In my first 2014 post, I revealed the “Trim the Fat” theme. We began to see corn and soybean price pressure that year. Dad and I discussed where we could cut costs and how we could do more with less. We had a little foresight into 2015, and thus forward contracted both 2014 and 2015 crops that year. I dropped the ball in 2015 and forgot to discuss a theme that year. Oops. I’m not perfect.
Drum roll please…the 2016 theme is Be Aggressive! You might have heard this cheer at the local game:
We could put a sign on the wall or watch a Youtube video of the cheer every morning. The theme is hokey, I know, but 2016 is a year in which we need to be aggressive in all parts of the business. Everything counts this year.
Our breakeven profitability is around $4 per bushel for corn and $9 per bushel for soybeans for 2016. Harvest forward contracts for both crops are 30 cents under breakeven as of writing this post.
With no grain marketed for this year, what can we do? We decided to get started and put a portion of corn in a professionally managed contract. I’m hoping for price bumps this spring so I can get started with forward cash sales and hedge-to-arrive contracts. We’re not ready to start locking in losses for the year just yet, but we need to be aggressive with marketing once prices reach breakeven.
The actual buy and sell prices don’t really matter for the feedlot cattle as long we lock in a margin. Buying and selling cattle isn’t the hard part- the hard part is tweaking rate of gain, decreasing death loss, and battling basis widening at time of sale. Aggressive marketing saved us in 2015, and we plan to handle it the same way in 2016.
The weather wreaked havoc on hay production in 2015. To say we need to be aggressive in baling would mean I have a weather crystal ball. Timely hay cutting and baling is important every year. I must be more aggressive in keeping in contact with current customers, addressing their needs, and finding new customers.
We share the theme with full and part-time employees. They, too, have a big role in our success. What’s your theme for the year?