When you have more than a quarter of a century in the newspaper business covering agriculture issues over that entire time, you find out that once an idea takes root it sticks around like quack grass.
The most recent edition of AgAdvance arrived the other day, and one of the feature stories caught my eye immediately.
The story had as part of its sub-head ‘in a tight farm economy, growers need to understand cost of production, find efficiencies and know how to manage risk.’
Obviously the suggestion farms need to know their cost of production as a starting place in terms of trying to generate a positive return makes sense, and is probably worth reiterating, as the article does.
And it is reiterating, as speakers at farm forums and conferences have been telling producers to know what their cost of production is for years and years now.
It is somewhat cyclical to be sure.
It has been less of a topic through the last few years where good yields and good prices boosted the ability of farms to earn a positive return, but as soon as the commodity prices drop a bit, reminding producers to be aware of their costs in producing a bushel of a particular crop pop up in reports.
Dr. Mike Boehlje, Distinguished Professor in the Department of Agricultural Economics and the Center for Food and Agricultural Business at Purdue University is the source in the AgAdvance piece. The key message was intense cost control and effective management of margins are overlapping strategies, and both are critical during a tight economic environment.
That is certainly sound advice but it would be little more than a reaffirmation for producers, who should be pretty much on top of those numbers by now.
It’s the same thing when it comes to the suggestion in the same sub head about finding efficiencies.
The farm sector has gone through down turns before. Twenty per cent interest rates are not that far in the past in real terms and led to farm foreclosures, farmstead stands to prevent foreclosures auctions, tractor cavalcades to slow highway traffic and treks to Regina and Ottawa to voice concerns on the steps of government.
On the livestock sector we went through the devastation that followed the initial case of Bovine spongiform encephalopathy (BSE).
Through such times it was often related how the efficient farms would manage the situation best, and that was no doubt the case.
But should we expect greater efficiencies are still to be found?
There is a limit to the amount of ‘fat’ in any operation, and given the history of the last 25-years, it is likely on farms that fat has long ago been trimmed and rendered.
Today’s farms should be lean, efficiency operations to have survived the ups and the very low downs of the sector in recent years.
So reminding to stay efficient are again supportive in providing assurances a producer is doing the right thing, it isn’t likely to be anything new for producers to hear.
Calvin Daniels is Assistant Editor with Yorkton This Week.
