Low cost production will be key to success in 2015, as low grain prices will likely persist throughout the year. If you are bottom-line oriented, download our bid sheet or use your own to get competitive bids for seed, chemicals and fertilizer.
"Farms have to refine how they spend money on everything from land to inputs," says Darren Frye, CEO at Water Street Solutions. "The problem is, many people wait too long before they make these changes, because change is difficult. The earlier you decide to take corrective action, the quicker you're going to be protected from the bad that's coming."
Fortunately variable costs will be the same or slightly lower in 2015 compared to this year, according to University of Illinois estimates. One exception: seed is expected to rise 5 to 10%.
Your cost for seed depends on several factors. You can buy cheaper, older hybrids, buy fewer traits, or plant lower seed populations, for example. You may be able to get volume discounts, early prepay discounts or incentives for buying more from one company.
In any case, you may want to bid out your business among competitors and see what offers come back.
"Farmers are going to need to call around and ask for price, discounts, prepaid options and other terms," says David Widmar, Ag Economist at Purdue University. "Start to look beyond the sticker price for the best deal."
The good news is fertilizer should be cheaper for 2015, although it showed little signs of a price pullback by early November. Lower crop prices and reduced corn acres should have ammonia in a range from $630 to $750, but the supply chain is subject to failures that may keep prices towards the high end of that range - or higher - by spring. Prices vary widely depending on what part of the supply chain you’re buying from.
Fertilizer is another input where it's smart to put out a bid sheet to get competitive offers. But before you do anything, make sure you have soils tested by a trusted lab to see where you stand.
For more, see our cover story, Smarter spending for 2015, in the November, 2015 issue.