Crop Variety Selection

Transcription

1 September/October 2016 Steve Okonek, Agricultural Agent (715) , ext. 376 Crop Variety Selection Be sure to spend some time and thought on corn and soybean variety selection this fall. In the UW corn and soybean yield data for Galesville, 2015, the difference from highest yielding hybrids and varieties was dramatic. The highest yielding soybean variety was 75 bushels per acre and the lowest variety was 57 bushels per acre. Eighteen bushels per acre times $9 per bushel soybean price is a difference of $162 per acre. Corn had a yield difference of 70 bushels from the highest to lowest hybrid in the trial. With a market price of $3.25 per bushel, revenue jumps by $ per acre from the lowest to highest yielding hybrid in the Galesville trial location. Time spent picking the correct corn hybrid, soybean variety, and alfalfa variety pays very well. Use as many sources as you can to pick the right cultivars for your farm. Do not rely on only one source of information, including university plots. If a cultivar performs at the top in many situations, that is probably a good cultivar for your farm. Watch soil types, planting populations, and other management factors to see that they line up with your management techniques. Also, don t forget disease resistance. Cultivars with high disease resistance may not yield as well as cultivars with low disease resistance in the absence of the disease. Disease resistance can carry a metabolic cost that can, in some cases, cause a resistant cultivar to yield less than a susceptible cultivar. Traits are another area that needs to be addressed. If you are rotating crops, you do not need root worm resistance traits. Traits do not add yield; traits protect yield that is genetically present in the base hybrid. A high yielding hybrid without root worm resistance traits planted after alfalfa should yield as high as a hybrid with resistant trait after alfalfa, assuming the genetic potential is present for the same yield. If you can save a few dollars and achieve the same yield, wouldn t you be better off? Also, every time the trait is exposed to the environment, you increase the chances of that trait becoming obsolete due to pest resistance. Only place resistance traits where the traits are needed. Spend some time choosing varieties to plant on your farm. It will pay off with added revenue. Evaluate the traits you need for your cropping system and don t plant traits that are not needed. Corn to Soybean Yield Ratio There has been talk in the last ten years about soybean yields not keeping up with corn yields. This is one of the reasons farmers give for growing more corn on corn. There are some problems with the practice of planting a crop continuously in a field, as we all know. The problems are lower corn yields, higher input costs, and increased tillage to deal with the heavy residue produced by corn. So the question is, have soybean yields kept up with corn yields? Continued on next page

2 Continued... Yields are compared using the corn to soybean ratio. Historically, the ratio has been 3.15 to one. During the period of 2000 to 2009, the ratio approached 3.5, starting the discussion that corn yields were increasing faster than soybean yields. Many ideas were discussed to explain this from GMO corn traits to more attention being placed on corn breeding by seed companies. When the years are analyzed, one thing comes clear. Corn yields in the early 2000 s were above trend line. In years with corn yields above trend line the ratio favors corn and years when both crops are near trend line, the ratio returns to normal. Years with corn yields below trend line such as 2012 favor soybean and the ratio is much lower. If we stop and think about why the ratio jumps around, it becomes clear that we are not seeing a difference in breeding performance or genetics. What we are seeing is the difference in growth and development of each crop. Corn pollinates in a short window with a long grain fill period. Drought and heat during pollination will harm yields and good weather conditions during grain fill may not compensate for the loss of yield that occurred during pollination. Soybean, on the other hand, pollinates and fills over a long period of time, up to two months of pollination compared to corn with five days of pollination. Five days of drought and heat during part of the pollination and fill period of soybeans will not have a great effect on over all yield. The differences in pollination and grain fill from corn and soybean will add resiliency to your farming operation, allowing you to survive variable weather. So what will the weather pattern be for 2017? What will the corn to soybean yield ratio be? We won t know that until harvest is complete more than a year from now. The more diverse the rotation, the bigger the rotation effect. Three or more crops in rotation appear to be the best, assuming there are markets for all the crops you will grow. So what should you do as far as seed purchase decisions? Grow as diverse of a rotation as the markets allow. Financial Management There are many tools you can use to measure your financial situation and track your progress. The first ratio we will look at is the debt to equity ratio. To obtain your debt to equity ratio you will first need to complete a balance sheet. Balance sheets are relatively simple to complete. A balance sheet is an inventory of all farm assets and liabilities. It is often difficult to separate personal assets from farm assets so it is acceptable that all assets and liabilities would be listed on the same balance sheet. If the farm is set up and run as a corporation or legally recognized partnership, assets owned by individuals, even if the assets are used in the operation, should not appear on the farm balance sheet. Your lender may require personal balance sheets for all partners or individuals owning shares in the corporation. Balance sheets should be constructed and updated at the same time every year so you can track your financial progress. The end of the calendar year or fiscal year is a good time to do this task. List equipment, feed on hand, cattle, land, and any other assets you may have. Make note of equipment or cattle that have been sold during the year as these items will be needed by your tax accountant. Selling and buying assets will affect your balance sheet. Assets are listed down the left side of the balance sheet and liabilities are listed down the right side of the balance sheet. Below is a fictitious example of a balance sheet. Continued on next page

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4 Continued Subtracting total liabilities from total assets yields net worth. This is the amount of money that John and Mary would have if everything they owned was sold and all debts were paid. It is important that realistic values are used for assets so the financial position of the farm is not inflated. If your goal is to measure the financial performance of your operation instead of tracking asset inflation, keep the value of assets such as land at a constant level or be very conservative adjusting the value upward. This will allow you to measure the amount of net worth that operating the farm generated instead of measuring net worth generated by simply owning assets. Notice the items that do not appear on the balance sheet. Loan balances appear on the balance sheet but loan payments do not appear on the balance sheet. Milk checks, rented assets, and open accounts less than 30 days do not appear on the balance sheet. Money owed to you by others would appear as an asset on the balance sheet if it is more than 30 days due. Businesses that frequently collect money for services usually have a bad debt allowance held as cash that appears on the balance sheet as bad debt allowance. This cash allows the business to function if a given amount of debt is not collected. John and Mary Farmer have a very healthy operation from a financial perspective. Their total liabilities are $667,000 on 3,168,000 in assets. The debt to asset ratio is.21. This is an excellent debt position for a farm. Debt to equity ratios should be.50 or less to be considered healthy. Up to 60% debt can be considered healthy if the operation is well managed and the cash flow is sufficient for debt service. Debt over 60% of total assets is cause for concern. Interest payments frequently take a significant share of the cash flow so little is left to meet emergencies or take advantage of opportunities that present themselves. Debt at 70% or greater is generally the level that lenders stop loaning money and the farm operator needs to decide the future of the business. Most farms do not survive at debt levels over 70%. One area of concern that often shows up in tough times is the high amount of current liabilities and a high current ratio. Current assets are assets that can be converted to cash quickly or cash itself. Current liabilities are debts due in one year or less and open accounts of more than 30 days. John and Mary s current ratio is 1.1 to 1, often stated as 1.1. Current ratio is calculated by dividing current assets by current liabilities. For John and Mary, the operating loan may not be a problem if it can be paid at the due date. They have enough equity that the operating loan could be rolled into long term debt, although if rolling short term debt into long term debt happens frequently it is a sign of poor business performance. Obviously, frequent refinancing of short term debt to long term debt will erode equity and needs to be addressed. Every farm needs to have a balance sheet, especially in these tough economic times. Talk to your lender, many have a format that they prefer to use. If you need another set of eyes to help you understand your balance sheet, call me at

5 COME JOIN US For questions or to register for any programs outlined here, please call the Extension Office at ext. 208 or September 22 Tax implications of transitioning from a sole proprietorship to an LLC Kari Apel, CPA, CEO of Apel Associates (1:00 3:00 pm) October 1 - Electronics Waste Collection - Southern Trempealeau County Solid Waste Recycling Center, Galesville. 9am to noon. Dairy Newsletter Enclosed is a copy of the El Companero/Dairy Partner newsletter. Please read this and share it with your Hispanic employees. This newsletter has informative topics and seasonal items that can help you manage your dairy and your farm workers. Topics throughout the year include dairy herd health, proper dressing for cold weather and winter driving just to name a few. World Dairy Expo, October 4-8, 9 am 5 pm Alliant Energy Center, Madison October 22 - Clean Sweep - Southern Trempealeau County Solid Waste Recycling Center, Galesville. 9am to noon October 27 Overview of succession planning Joy Kirkpatrick, Center for Dairy Profitability (1:00 3:00 pm) November 17 - How Big is Your House? - How Big Does It Need To Be? Financial analysis for succession planning Kevin Bernhardt, UW-Extension Farm Management Specialist (1:00 3:00 pm) January 26 - Estate planning Bridget Finke, Attorney, Bakke Norman Law Offices (1:00 3:00 p.m.) February 23 Long Term Care: Planning for My Future Needs Steve Shapiro, Medigap Insurance Spe-cialist, State of Wisconsin Board on Aging and Long Term Care and the Wisconsin Office of the Commis-sioner of Insurance (1:00 3:00 pm) March 23 Medicaid Eligibility and Recovery Anthony Schmoldt, Attorney, Schmoldt Law Office (1:00-3:00 p.m.) Pesticide Applicator Training - January 25, 2017 THANK YOU! This Trempealeau County Extension Newsletter is sponsored by these Trempealeau County Community Agricultural Banks: Pesticide Applicator Training - February 15, 2017 Pasture Walk Schedule Specific dates/times are yet to be determined. September Pasture Walk Saturday Sept. p.m. Kaufman Dairy ~ Roger Kaufman Farm N5131 County Road X, Melrose October Judt Hasse-Hardie Blair Alternate host James Litscher (608) or Jjames237@centurytel.net Alliance Bank: Bank of Galesville: Independence State Bank: Pigeon Falls State Bank: State Bank of Arcadia: Union Bank of Blair: United Bank: Waumandee State Bank: IF YOU ARE ABLE TO RECEIVE THE AG NEWSLETTER BY , PLEASE SEND ME YOUR ADDRESS AT michelle.rose@ces.uwex.edu This will help us with printing and mailing expenses