Midwest Crop Checkup: Are You Stress Testing Your Decisions?

2019 Growers Should Analyze Multiple Scenarios to Determine Needed and Expected Cost

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By Thomas Eatherly

Midwest agriculture has had to rewrite the book for making smart crop decisions this year.  Weather has prompted delivery, logistics, and storage issues for some growers, and a rush to market for others.  This growing season has been challenging at best – with the cool, cloudy weather – and further difficulties expected for many crops to reach maturity unless there is an unseasonably long fall.

Growers are facing many decisions surrounding planting revenue, yields, crop insurance, and market facilitation payments.  Discussions with bankers regarding increasing input costs are stressful as producers contemplate whether they should opt out and take preventative planting revenue, and evaluate their current debt service, working capital, planting window, and rented vs. owned land.

While many of these decisions vary by area of risk and financial health of the producer, there are some key questions you should be analyzing by running multiple scenarios and accounting for variabilities to stress test your options and make thoughtful decisions.

  • Have you had any replant?

    • If yes, did the additional seed cost you anything? What did it cost to kill the first planted crop?  What yields do you expect now on that land?
    • Does your crop insurance pay anything for replant?
  • Are you planning on Preventative Plant (PP) coverage?

    • If yes, are you planting an alternate crop or will land be fallow?
    • If planting another crop, what is it, expected yield, cost? What is the revenue per acre for the PP claim?
    • If a failed crop, what is the revenue per acre for the crop insurance claim? Are there costs that you have already spent, like fertilizer?  What budgeted costs are you able to eliminate from your budget?
  • What are your new projected yields, given the conditions you have experienced?

  • What is the status of your booked crops?

    • How many bushels, pounds, etc.? What price?  What is basis doing in your area?
  • Factor in potential Agriculture Risk Coverage (ARC) / Price Loss Coverage (PLC) payments and Market Facilitation Program (MFP) payments as they become clearer.

K·Coe Isom’s AgKnowledge team helps growers make effective decisions by performing comprehensive analysis around these scenarios, and evaluating what would be needed and the expected cost.  Contact an AgKnowledge consultant to secure the most productive results.

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