cq perspectives nov 2008

8/4/2019 CQ Perspectives Nov 2008

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OFFICIAL PUBLICATION OF CROP QUEST AGRONOMIC SERVICES, INC

C r o p Q u e s t P e r s p e c t i v e s

Volume 18 Issue 6 November 200

Agriculture:A BRIGHT SPOT IN A BLEAK ECONOMY

If the nancial news is better for the agri-culture industry relative to just about every

other sector of the economy it still doesntmean the light at the end of the tunnel isany more visible for farmers and produc-ers than for the rest of America. Over thelast two years, for example, fertilizer costshave doubled and prices continue to rise. Ascrop producers plan for their 2009 fertilizerrequirements, theyre learning that suppli-ers want a larger portion of the commitmentpaid upfront 100% in some cases. Thecredit function of these transactions, accord-ing to Terry Francl, Senior Economist at theAmerican Farm Bureau Federation, is shift-ing from the fertilizer producers and dealersto the farmers. The net result, says Francl,is increased cost for the farmers.

Unlike the rest of the economy, however,the credit crunch does not form the epicen-ter of the nancial difculties aficting theagriculture industry. Instead, the high priceof energy worldwide, Francl cautions, willreduce the export demand for agricultureproducts and ingredients and ultimatelyaffect farms prices. Likewise, a slowerdomestic economy would also weigh on thedemand for farm commodities and prices,he explains. Credit isnt a factor, either, intransactions when farmers sell commoditiesto elevators and processors. Farmers are notbeing asked to provide more credit, saysFrancl, but they are being offered a lowerprice generally due to the higher basis thedifference between the futures price and thelocal cash price.

LESSONS LEARNEDWhether farmers are experiencing higher

costs or lower prices, Francl concludes thenet impact is the same: less income. But still,he maintains, agriculture, especially at the

farm level, is in good shape. The overallagriculture balance sheet is very strong and

the USDA is projecting record high farmincome for 2008. He also cites an enviablylow debt-to-asset ratio of 10% as cause foroptimism among farmers. The USDA reportsfarmer debt is the lowest since 1960 whenit began keeping such records. Equipmentdealers have reported that it is not unusualfor farmers to pay off their ve year notes inthree or four years.

That debt management skill and disciplinecould be a source of pride, as well. The ag-riculture industry is in strong shape becauseit learned its lessons from the 1980s, saysKevin Dhuyvetter, Ph.D., Extension Agri-cultural Economist, Farm Management atKansas State University. Because of that, heexpects the nancial crisis aficting the restof the nation, and the world, to have less of anegative impact on farmers. Local and ruralbanks are in reasonably good nancial shape,Dr. Dhuyvetter points out which may haveaccounted for the vociferous opposition fromthe Heartland to the bailout; and why bothKansas senators voted against the proposal.

Large corporate farm and livestock opera-tions, on the other hand, might be exposedto the same credit limitations facing bigcorporations in other areas of the economy.In some cases those big farms and rancheshave outgrown the local banks, claimsDr. Dhuyvetter, and they will have to dealwith the hazards and conditions imposed bythe struggling banking giants. Illustratingsuch a situation, Lane Broadbent, an analystat KIS Futures, says bankers have beenreluctant to nance cattle in the last coupleof years because of rising feed costs andweather conditions.

However, Dr. Dhuyvetter has talked withrelatively large cattle producers who have

Continued on Page 3


2/4C r o p Q u e s t P e r s p e c t i v e s w w w . c r o p q u e s t . c o

With the inux of new employees joining theCrop Quest Team, it is our mission to ensure

every producer has a talented, dedicated andknowledgeable agronomist as a partnerwithin their operation. Whether you have aseasoned veteran agronomist or one freshout of college, you are receiving the qual-ity service Crop Quest demands.

Statistics from the Bureau of NationalAffairs shows that recent graduates aver-

age 18 months at one job. Additional statisticsshow that todays generation (Generation Y) will

have over 10 jobs throughout their lifetime. Therefore,

Crop Quest is committed to nding the right people who possess apassion for working in production agriculture and to engage thesenew employees so we can retain them as your agronomist for anextended period of time.

Because Crop Quest is an employee-owned organization, ouragronomists have a vested interest in the success of both ourcompany and your operation. To ensure success on both sides, weprovide a variety of on-boarding techniques. On-boarding is thenew buzz word for orientation and training of employees to helpthem become engaged within the company. On-boarding beginswith the interview process and continues throughout the rst oneto two years of employment. We want our new employee-ownersto have the skills and knowledge to be successful in the eld.

Our new agronomists are not necessarily new to the business of

consulting. Many have worked at least one summer as an internwith experienced agronomists who served as a mentor. During thisinternship period, they are learning the various facets of produc-tion agronomy. They have a chance to further develop their skills

in identifying problems within the eld as well as developingsolutions to overcome them. All new hires work with a mentoragronomist who may or may not be their division manager.

The mentoring process does not stop with the end of the cropseason. It is an ongoing process that extends throughout severalyears. In addition to the important role mentors play in training anew employee, the mentor is also learning. The great thing abouagriculture is that it is a dynamic industry constantly changing soour agronomists are constantly learning.

During the winter months, Crop Quest employees spend a lot time in meetings to learn about new advancements and productsthat are available to our customers. At these meetings, lots of ideand information are shared between our staff, and a network of

collaboration is established. It is this type of networking that is rally one of Crop Quests greatest strengths and assets for both themployee and the producer.

A customer may only know the agronomist that comes to theirfarm. But, that individual is backed by the experience and knowledge of the entire Crop Quest staff. It is pretty rare that someonewithin our team has not seen or been faced with a particularproblem. By tapping into this network of expertise, we are able tdeliver timely, pertinent advice to our clients.

Crop Quests on-going, on-boarding and mentoring programin addition to the open communication and meetings with otherindustry partners (local co-ops, seed dealers, chemical companieetc.) and our network of trained agronomists ensures producersthat their agronomist is prepared to provide the most sound advic

and recommendations possible. Our employee-owners will con-tinue learning about the most recent technology and advancemenin agriculture while applying this knowledge to help our producecustomers with their 2009 farm plans.

St. John, Kan.

By: Jim GleasonRegional Vice President

Networking And Training Among

Crop Quest Agronomists Provides

Consistent Service To Producers

CROP QUEST ADDSSTAFF FOR TOUGH TIMES

With the U.S. and global nancial institutions encoun-tering a perfect economic storm of tight credit, investmentbank failures and stock market panic, not to mention

declining property values, the importance ofagronomy specialists to the agriculture indus-try cant be overstated. Josh Wendland joinedCrop Quests staff in the week of Wall Streetsmost precipitous drop since 1929 and its big-

gest single day recovery in history. Wend-land sees his primary responsibility ashelping crop producers become moreefcient in the face of rising fertilizer

costs and declining futures prices. He will be responsiblefor Crop Quests activities in several Eastern Kansascounties including Washington, Marshall and Clay,and will be based in Greenleaf, where he most recentlymanaged the agronomy department for United FarmersCoop. Wendland is a graduate of Fort Hays State witha degree in agricultural science and business. From hisearlier experiences, he is familiar with the challengesproducers in the area face and knows many of the farm-ers. I hope to grow the customer base for Crop Quest,says Wendland, and help farmers manage their businessin this tough time.

Josh Wendland


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Member, National Alliance

of Independent CropConsultants, CPCC-I

Certied

By: Ron OHanlonPresident

Agriculture ... Continued from Page 1

Now that many of the inputcosts for the production of crops

have increased signicantly and

with the decline in commodityprices, it is more critical than ever to

consider the return on value for every in-put prior to planting the next crop. Most of the wheat has beenplanted; so many decisions have already been made for thiscrop. Since wheat is a high responder to topdress nitrogen andfarmers are accustomed to split applying their nitrogen needsfor this crop, the remaining nutrient decisions can be madeduring the late winter to early spring. This also helps to lowerapplication costs, if both nitrogen and herbicides can be appliedat the same time.

Without proper soil testing, it is just a shot in the dark asto which soil nutrient is the most limiting in a given area. Soiltesting also allows for determining the nitrate nitrogen carry-over, which can be used for the next crop within the High Plainsregion. On some elds, this can be a tremendous cost savingswhere the carryover nitrogen is high from a previous over-ap-plication, reduced crop yield or a high nitrogen mineralizationof the soil. Some areas across the country do not even test forcarryover nitrogen due to the high leaching that occurs within

their heavier rainfall areas, buthere in the High Plains, it is animportant nitrogen resource.

Soil testing helps to deter-mine which of the limiting nu-trients has the greatest chanceof giving back the greatest re-turn. If soil pH is really low, itis important to correct this withliming, before the crops will re-spond to any of the nutrients formaximum value. The same goesfor each of the individual nutrientsthemselves.

Fertility is one of the rst decisionsthat has to be made regarding cropproduction, but all of the crop inputsneed to be evaluated during this nextgrowing season to achieve maximumeconomic return. Be sure to visit withyou Crop Quest agronomists regard-ing crop budgeting and other croppinginput decisions.

Input Cost Cr i t icalTo Prof i tabi l i ty

only been moderately, if at all, affected by the crisis on WallStreet. He hasnt come across any cattle producers who have en-

countered major credit obstacles. But he also makes the disclaimerthat he focuses his research and analysis on Kansas and does notproject what he has found in the Sunower State to necessarily holdin other states.

Nevertheless, tight credit has found its way back to the farm, asthe agribusiness sector of the economy dips downward slightly fromits current all time high.

When the futures markets that had propelled grains and cottonprices to record highs earlier in the year showed signs of decline inJuly, analysts couldnt determine the cause, according to Darin New-some of DTN, until they began to realize the depth of the credit crunch.

Francl believes there are a number of factors affecting farmincome, but shrinking credit availability which is the leading causeof the current nancial instability simply serves to exacerbate the

already volatile input/output price situation.Carl Anderson, an agricultural economist at Texas A&M, backs up

what Francl and Dr. Dhuyvetter say, indicating there is no immediatecredit problem because agricultural lending institutions remain strong.But theres fear, he says, that the recent nancial meltdown willmake bankers far more cautious. He anticipates lenders will wantmore equity and collateral before approving loans to crop farmers andranchers as well as beef, pork and chicken processing companies.

STICK TO THE BASICSWhile many fabled speculators over the centuries have made

fortunes during economic crises, Dr. Dhuyvetter isnt advisingfarmers and livestock producers to look for windows of opportunity

for quick gains. There also remains the dangerous potential thatthe nancial crisis could be deeper and more prolonged before the

federal bailout of Wall Street shows any signs of improving the sitation. A majority of economists are calling for things to get worsebefore they get better.

Dr. Dhuyvetter suggests farmers and producers hedge theirchances of survival by sticking to what has made the agriculturesector the only bright spot in the U.S. economy. Even with thefutures market providing farmers with record incomes this year, itis not the time now, according to Dr. Dhuyvetter, to ease up on themanagement principles that have elevated the fortunes of manyproducers. If I am a producer, I need to be managing costs aggressively, he emphasizes.

Terry Francl at the American Farm Bureau advises crop farmersto procure their inputs for 2009 carefully. He cautions about biddiin higher costs for the inputs since futures prices are trending dow

ward. Using less fertilizer is an option for curtailing costs, and hesuggests considering alternative seeds. It might also be the time toreview and renegotiate land usage costs if you are renting or leasinproperty. If you are about to get an increase in the rent youre paying on a lease, he says, maybe you ought to decide whether or nit is worth farming it.

These decisions farmers have to make are crucial, especially inlight of the uncertainty of the domestic and global economies, andshould not be taken lightly. Just as nutrient inputs are vital to theoutcome of your crops, the input you get from qualied agronomianalyzing your particular situation, circumstances and plans is es-sential to the success of your business.


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Mission StatementCrop Quest is an employee-owned company dedicated to providing the highest quality agricultural services for each customer. The quest of our network

professionals is to practice integrity and innovation to ensure our services are economically and environmentally sound.

PRSRT STD

US POSTAGE

PAID

DODGE CITY K

PERMIT NO. 43

Employee-Owned & Customer DrivenCrop Quest Agronomic Services, Inc.

Main Ofce: Phone 620.225.2233

Fax 620.225.3199

Internet: www.cropquest.com

[email protected]

Crop Quest Board of Directors President: Ron OHanlon

Director: Jim Gleason

Director: Dwight Koops

Director: Cort Minor

Director: Chris McInteer

Director: Rob Benyshek

CROP QUESTExpands into

Northwest Kansas

Late this

summer,

Crop Quest Inc. opened

for business in North-

west Kansas. This is an

area of the state where

Crop Quest has been

interested in servicing

for many years. We

had the opportunity to

locate two experiencedagronomists into the

area, and are very

excited about the

future of the area.

We would like to

introduce you to the

agronomists who will

be servicing NW KS:

Grant Havel has over

10 years experience with Crop Quest. Grant

has worked in both SW and NE Kansas for our

company. He has extensive experience in agronomy,Precision Agriculture, and Nutrient Management.

He is a very able and competent consultant who

builds complete trust with farmer/producers

from day one. Grant

is now living in St. Fran

cis, KS. You can reach

Grant at 785-456-5729.

Norman Kinderknech

worked for Crop Quest

the late 90s in Central,

KS. He has been workin

as a farm management

consultant the past few

years. Normans experi-ence in both agronomy

and farm nancing mak

him a very valuable asse

to the producers in the

area. Norman resides in

Colby, KS. You can reac

Norman at 785-443-3483

We are already seeing

a tremendous response

from producers. Farmers in the area are craving a

quality consulting service that will always keep their

best interest in mind. We believe we offer this servicthroughout our organization. Northwest Kansas wil

be no exception.

Grant Havel Norman Kinderknecht

Ulysses, Kan.

By: Dwight KoopsRegional Vice President

cq perspectives nov 2008

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