Growing Profits in 2010

As you know, Lewis Hybrids has a close working relationship with broker, Al Kluis. We sponsor morning and weekly updates along with hosting webinars two times a month. I have followed Al and kept a small score card for the last year. Al is right on with many of his recommendations. Cargil rates him as one of their top brokers. This guy is worth taking stock in.

At a recent seminar, Al spoke about 10 ways to grow profits in 2010. I have looked at that presentation and want to review it on this blog. This is all Al's presentation and his opinion. I hope to present it from Al's viewpoint.

1. Think and Plan for the Long Term

Watch different markets. Gold is up 300%, US Stock Market is up considerably since the low last winter.

2. Be Aware of Key Economic Factors

Where is the dollar priced and how does this affect you and your farming enterprise? How do grain markets react to the Dow Jones? Why does corn markets follow the crude oil market so closely? If you look at charts of the dollar, Dow Jones, crude oil and grain markets, there is a lot of similarities. It is important to know the relationships between them so that you can understand the finer points of marketing.

3. Invest in Technology to Maximize Yield

What does Al include in the category of technology? He lists seed, grid sampling, drainage tile, and fertilizer. Why invest in these technologies? From 1970 until 2004 gross revenue on the farm per corn acre ranged from $200 to $300. Before that revenue averaged below $100 per acre. Since 2004 revenues have doubled. This is a welcomed development. Al projects that by 2019 gross revenue per acre of corn will reach $1800. Increases in yield and timely marketing will contribute to these increases. Expenses have, and will continue to rise also. Investing in the technologies will help keep the acre profitalbe. I can speak for the technologies in corn. Drought tolerant and N utilitzing corn will boost yeilds. The areas of greatest increase will come from the more arid parts of the country.

4. Have a Written Marketing Plan

To start a written marketing plan you need to ask yourself several questions and answer them. Write the answers down so that you can evaluate your progress throughout the year.

1. What is your cost of production?

2. What is your profit goal?

3. How many bushels do you have to sell?

4. Where is your grain stored?

5. When do you need the money?

6. What are the historic basis patterns in your area?

5. Make Crop Revenue Insurance Part of Your Plan

Al suggests selecting the right policy for your farm. During the year sell the insured bushels (A bushels) ahead. Cover the uninsured bushels (B bushels) with puts.

This covers 5 of the 10 ways to grow profits. The next 5 go more into marketing of your crop. I will follow up with these another time. This fits right in with what I have been blogging about previously. This is the time of year to do this kind of paper work. I wish you luck with the planning process. If you need any assistance, feel free to contact me.

Perri Draisey

319-929-7851