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Foresight for Successful Cropping Systems Unlocking the “Secrets” of Profitable Crop Production By Zachary Fore When it comes to crop farming we don’t have the luxur A couple of years ago I wrote an article titled “Characteristics of High Profit Farms and Farmers” in which I listed characteristics correlated with farm profitability, from Australia to Illinois to Canada. I developed the following consolidated list of successful characteristics based on these sources and on experience with growers in the region: • They focus on production and have consistently high yields • They have an excellent handle on the financials of their business – they spend their time where they get the best returns • They are exceptionally well informed and take time to plan • They adopt new technologies quickly and appropriately • They keep equipment costs in line • They have a positive attitude Since that time, I have continued to work on identifying specific practices that lead to profitability. I have an excellent partner in this endeavor – the Northwest Minnesota Farm Business Management Association (FBM). FBM has a very large, detailed database with costs and returns on individual crop enterprises. For example, on spring wheat for cash rented land in 2002 the database includes 122 fields from 83 farms. The database provides great detail on financial information, but does not indicate what practices were used to achieve those financials. For example, the data indicates that high yields are highly correlated with financial success, but it doesn’t indicate what practices led to high yields. Therefore, FBM allowed me to work with them to develop a questionnaire for their farmers that would help us understand what specific practices were correlated with profitability. The questionnaire contained 40 questions covering many topics including: • Access to credit • Soil productivity • Educational meetings attended • Soil drainage • Fungicide use • Marketing procedures used • Yield mapping • Crop insurance • Timeliness of planting and harvest • Internet access • Crop rotation • Grid soil sampling The questionnaire was completed by 74 farmers. The farms were sorted by net farm income and divided into high, low, and average profit groups. We then looked for trends to identify what correlated with high net farm income. Before I go into what we found, a few qualifiers are needed. • This is just one year of data (2002 crop year) and results are greatly influenced by the specific conditions during that year. Results over a multiple-year period are more reliable. • It is important to emphasize that correlation is different than causation. With this questionnaire we are looking for practices that correlate with profitability, but we don’t necessarily know if those practices caused profitability. If correlation is observed it makes sense to look deeper to understand if that practice is likely to cause profitability. The first thing we observed was that farms with sugarbeets in the cropping system were greatly different from farms without sugarbeets, so for comparison we separated farms as with or without sugarbeets. There were 36 farms with sugarbeets and 38 without. I will not attempt to summarize all 40 questions here. Some of the key questions are summarized in the following tables. Few differences in profitability groups were observed. Average age, years farming, soil productivity, drainage, # of farm magazines received, and # of educational meetings attended were similar in all groups. The high net income farms tended to: • Have more years of post high school education • Participate at a higher rate in marketing clubs • Have fewer years of >40% crop loss/5 years. More trends between profitability groups were observed for the farms with sugarbeets compared to those without. Age was similar for all groups. The high profit group tended to: • Have more years of farming experience • Have more years of post high school education • Have higher soil productivity • Have better drainage • Have fewer years of crop losses >40% • Participate more in marketing clubs • Receive more farm magazines • Attend more educational meetings Many of these factors may be closely related. For example: soil productivity, drainage, and years of crop losses >40% are likely to be closely related. It is not surprising that more years of crop losses of >40% are more common in the lower profit group. What is more important is why these farms had these crop losses. Lower soil productivity and poorer drainage may be the reasons. Every Farm is Different We plan to continue this project, increase the number of participating farms, and summarize the data across years to give us a better understanding of factors correlated with high farm profitability. The more we can learn from others the better. Farms Without High 20% Avg. of all Farms Low 20%
Farms With High 20% Avg. of all Farms Low 20%
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y of learning from only our own
mistakes – we would run out of money before we learned enough. So, it is critical that we take every shortcut to success we can find. It has been a goal of mine to try to identify strategies and practices
that are leading to success and communicate them to other growers.