Sunday, November 24, 2013

Hope & Marketing

Hope isn't a plan of action....

One of my weakest skills as a new farm owner & operator is marketing.  What is the best way to market my grain?  When?  How do I maximize my profit?  I've put a lot of thought into it and sought out resources to help me over the last six months.  I sold all of my 2013 crop and I would give myself a "C" grade overall.

Loading lentils to haul to the elevator
Lentils:  I contracted my lentil crop with a local grain elevator just prior to them being harvested.  I wasn't sure how many bushels to contract because the crop wasn't cut yet.  How do you know for sure?  After talking with some neighbors, I decided to contract 5,000 bushels.  Boy did I feel relief when that 5,001th bushel went through the combine!  I think I did pretty well with the lentil marketing.  I got a good price, I got them hauled off early, and all the lentils were Grade #1 when they arrived at the elevator.

Wheat:  All of my wheat went into storage on my farm, as none of it was sold yet at harvest time.  I then contracted half of my wheat crop in October for November delivery.  The trucks will be at the farm next week to haul it off to the elevator.  This contract was a 12% protein bid and the price was fair.

It takes a market plan to turn kernels of wheat into product
Then I sat and watched the market.  Down...down...down.  Finally this month I contracted the last half of the wheat for February delivery.  That contract is a 14% protein bid.  The price is okay, I'll still make a profit...but not as good as it could have been.

So why the C grade for marketing?  Well, I had other tools that I could have used to help me and I didn't.  I could have done some hedging.  I could have done a Put option to protect me against the falling wheat prices.  I could have done some pre-harvest contracts.  And I haven't done anything yet to get the 2014 crop priced and locked in at a profit.

So I'll stick with the C grade.  I made a profit and survived.  It wasn't a failure, but there is a lot of room for improvement.  I guess that's one of the things I love about the farm life...there's always the hope of doing it better next time.

But as we used to say during my days in the military...hope isn't a plan of action.  You can hope all you want, but it takes study, planning, and work to get the results you want.

It's time to build my plan of action...

Sunday, November 17, 2013

The Great White Combine wasn't exactly THE great white combine, but it was his little distant cousin.

Yep, I had a little hail damage on my first crop.  It came in an afternoon thunderstorm that appeared non-threatening.  My crop was standing and ready to harvest, just waiting for the neighbor to make his way over after finishing some of his own.  When I heard the hail begin to hit, my heart sank.  It hailed for about a minute but it seemed like an eternity as I waited it out.

Wheat kernels after the hail
In the end, I got pretty lucky with the little hail storm; it could have been much worse.  The hail stones turned out to be about pea-sized.  When I scouted for damage, I could see wheat kernels on the ground and a few broken wheat steams.  The area of damage appeared to be under a half-section of crop (less than 320 acres).

My hail insurance was through the State of Montana.  I called to register my hail claim and explained that I would be harvesting the crop in a couple of days.  I have to say, I was very impressed at how quickly the State Hail Program responded and sent a crop adjuster to the farm.  Yes I was a bit skeptical; I expected government bureaucracy would mean two weeks until an adjuster arrived.  But just two days after the storm, he was on the farm and inspecting the crop.

State Hail Program adjuster checking damage
The final calculations on the damage came out to be 6.1% loss on 160 acres.  I felt that the area of damage was a bit bigger, maybe around 220, 240.  But after watching the adjuster do his appraisal I also felt his damage assessment of 6.1% was very liberal.  So it was a give-and-take situation and I felt like I got a square deal in the end.

Even more surprising?  The State Hail Program had the insurance loss check to me within another 10 days.  Yeah, I would have bet the farm that it would take months for that claim to be processed.  10 days is amazing.

The Old Man used to say you win some, you lose some.  In this case, I lost some grain and lost a bit of profit.  But I won some knowledge and won some respect for The Big Guy's combine.

Yes...the Great White Combine.

Sunday, November 3, 2013

Harvest Is Done!

Finally...harvest is done!
First though, I apologize for the lack of updates about my farm.  I was in the habit of updating every Sunday morning and then suddenly farming happened and I was working every weekend.  I guess I'm still trying to work on my routine here.

Well, the main news is that harvest is finally over.  It was great!  There's no better time on a farm than during harvest...the sights, the smell, the long days...I love it.  Harvest lasted about two months, mid-August to mid-October.  Actually, it took a total of four days to harvest my crops, but I spent the remainder of the time helping two neighbors with their crops and they have a lot more acres to cover than I do.

My first lentil harvest
The lentil crop was fantastic!  We harvested them in early September and I got about two years' worth of production in just one year, even though they were red lentils (green lentils usually have a higher yield than reds).  Two neighbors and I cut the crop with three modern CaseIH combines.  My 200 acres took an entire day because the lentils were very thick.  Instead of clipping along at 4-5 mph, we were running about 2 mph and in many cases less than 1 mph.  The lentils themselves were very good quality.  They were uniform in size, had no discoloration, and they were very clean.  It's great to have high yield and high quality in the same year!
Neighbor harvesting my spring wheat
And the wheat crop was also extremely good.  A different neighbor harvested my wheat with his three modern John Deere combines.  They spent about three days getting my 950 acres cut.  Yields were very high, but quality took a bit of a hit.  The wheat is bleached out a bit due to rains and the protein is lower than usual because the entire summer was so wet and cool.  However, I'm very happy with the was a fantastic beginning to my farming career.
Wheat standing and ready to cut
Meanwhile, I continued harvesting with the first neighbor.  I'm not sure on the exact numbers, but I would guess we harvested about 3,000 acres of lentils and about 10,000 acres of wheat.  We had it all during harvest...great yields, broken equipment, stuck combines (me!), great suppers in the field, busy truckers...and I loved every minute of it.

I have a lot more updates from the last couple of months.  A hail storm damaged some of my wheat, I spent a few days in Washington D.C. during harvest, we had a combine catch on fire, and I've gotten about half of my crop marketed.  But I'll discuss those areas in future updates.
In the meantime...harvest is done!

Trucks getting loaded with grain