When it comes to crop production and marketing, 2021 is not the year to get wimpy according to some leading Western Canadian agriculture advisors. With some really strong markets across most major commodities don’t let fear get in the way — just go for it.
That might be somewhat of an over simplification, but it captures a positive and optimistic outlook for farmers as they gear up for the 2021 seeding season and crop year. The advisors weren’t talking about reckless behaviour with production and marketing, but they did lean toward stepping outside the box, stepping outside of your comfort zone in 2021.
The presentations were part of the first online seminar organized by AGvisorPRO —that’s a relatively new service that was launched over the past 18 months, that connects farmers and their questions directly with an ever-growing team of crop, livestock, marketing and farm management specialists. Visit website: agvisorpro.com and download the app. AGvisorPRO).
The first seminar was hosted by Patrick Walther, co-founder and COO of AGvisor PRO, while company founder and CEO Rob Saik was M.C. for the hour-long event.
On deck, March 16 for the first on-line, free seminar were Dean Klippenstine, partner and business advisor with MNP’s agriculture team based in Regina (email: [email protected]), Derek Squair, with Exceed Grain Marketing (visit: exceedgrainmarketing.com), also headquartered in Regina and Travis Wiens, with Global Ask Risk Solutions and Annex Agro based at Milestone, SK. (Visit – www.annexagro.com).
You can connect with all these advisors through the AGvisorPRO website. Some 220 farmers from across Western Canada, parts of the U.S. and even Europe joined in on the on-line seminar, to listen to the messages as well as ask questions as the advisors looked at “FINANCIAL DECISIONS FOR PLANT21”. So what were some of the key messages:
SET SOME DREAM GOALS
Dean Klippenstine says don’t be afraid to dream big. Write down those “stretch margins”… in a perfect world and ideal growing season what’s the optimum return you might expect from each crop? If your dream is something like an 80 bushel yield on canola, locked in and sold at $16 a bushel then just write it down — the process and list doesn’t need to be fancy.
On the other end of planning, put your risk management tools, your safety nets in place. Look at what insurance plans are available and get those in place, so your downside is protected and “then forget about it”, he says.
And finally he suggests, with safety nets in place, look for the agronomy team or advisors that can help you aim toward that ideal yield and return per acre. “No one ever puts a measure on missed opportunities,” says Klippenstine. “The season is over and what was the cost of “I should have sprayed that crop one more time”, or “I should have applied that next 20 pounds of nitrogen.”
He says past events —a crop failure, severe frost damage, a major hail event — can all impact farmer thinking and sometimes hold them back, make them cautious.
But, he says with such a strong market year for most commodities, “farmers need to look at who and what they need to do on the agronomy side to hit those dream targets.”
UNDERSTAND THE MARKET
Derek Squair of Exceed Grain Marketing says while prices look good to exceptional for most crops, it is important to understand and follow events that influence markets. “Know your fundamentals,” he says. “Follow the issues and weather patterns that can impact the market.”
For example, with a new strain of swine flu in China, how does that affect the market? For a while the Chinese hog industry downsized, then it began to build up creating a greater demand for canola and soybean meal, but are herd numbers trending down again?
Similarly what is happening with the harvest in South America – yields in Argentina are down, Brazil looks pretty good but is having some harvest issues. And in North America seeding conditions are fairly dry across northern tier U.S. states. These are among the factors than can influence crop prices here in Canada.
Along with following the markets, Squair also recommends having a risk management plan in place. “Know your risks and put insurance in place,” he says. “If the market does turn you are protected.”
And finally he recommends producers have a cash flow plan in place. Know when bills are coming due, know when cash is needed, and develop a marketing plan that provides cash flow when needed. As part of that also look at market trends to know when prices are usually a bit stronger. Crop prices might be a bit weak as combines start rolling, for example, but then rally a bit later in the year.
COVER YOUR GRASS – SEED AND ALL OTHER SEEDS
Travis Wiens with Global Ag Risk Solutions (GARS), says whether farmers use GARS or not, it is important to know your risk and have insurance in place.
Wiens says with crop prices quite strong, it might be a year when farmers decide to be aggressive with inputs to optimize yields, and that can be an excellent plan.
“But I am sort of the “what if” guy,” says Wiens. “You apply the inputs, but what if something goes wrong. What if conditions get dry? What if markets begin to decline? My role is to be an insurance advisor and not to sell any particular plan.”
Wiens says an important element of a risk management plan is to determine the worst-case scenario that you can live with, and put insurance in place to cover that. “Then if your worst case scenario happens at least you are protected,” he says. He urges farmers to get several insurance quotes and also seek out advice from trusted advisors. “You’re not alone in making these decisions,” says Wiens.
He says the government AgriStability Program isn’t perfect, so it is important to know what it covers and how it might differ from other complete protection insurance policies. And he says it may make sense to double insure with both government and private insurance.
“Private insurance claim revenue is not counted against their AgriStability claim,” says Wiens. “Growers can double insure. The revenue from private insurance does count as revenue though. It can help growers maintain their AgriStability reference margins and protects them by keeping reference margins higher. ”
A TWO-FOLD MESSAGE
So the message from the AGvisorPRO seminar is two-fold. Prices for all commodities appear to be good at least in the near and mid-term, so this is a great year to go for it. Do your best to follow a proper rotation, but consider cranking on the inputs — use some “assertive agronomy” to go after the higher yields.
Rob Saik says he has been involved in some crop outlook discussions where farmers and specialists were tossing around contribution margin returns ranging from $300 to $500 per acre. That’s a pretty tempting profit potential.
But at the same time, be smart about it too. Shoot for the stars, but have the safety net in place, have a sound risk management plan, get insurance, follow the market fundamentals and use the marketing tools. And don’t be afraid to ask for guidance and advice.
AGvisorPRO intends to have a series of these on-line seminars on various topics over the coming weeks.
Lee Hart is a field editor with Grainews based in Calgary. Contact him at 403-592-1964 or by email at [email protected]