Lyle Minogue from Lacadena, Sask., told the Saskatchewan Pulse Growers annual meeting during Crop Production Week that farmers need to consider every cost to ensure they are maximizing returns on their land and other assets.
“It’s funny. You can put on an event to show farmers how to best set their combines and you’ll get 100 show up. If you advertise a seminar on managing your farm business and economics, and you’d be lucky to get 10,” said Minogue, a farmer and agricultural business educator.
“There’s more money in knowing how to manage your business than you will ever be able to get out of improving the way your combine is set,” he said.
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When building a business plan, producers should consider their equipment’s alternative uses, such as custom work for other growers, he said.
‘If you and your combine can go custom harvesting for two weeks at $1,000 a day, it will likely make you more money than working another job four months in the winter.”
Minogue told producers to know all of their costs when it comes to producing crops.
“You can’t let the cost of production dictate what you will sell that crop for, but (based on that) you decide if it makes sense for you to grow it next time,” he said.
In advising producers about where to market their grain, he said they should examine who gives them their advice.
“Does getting advice on selling your grain from the guy who sells you your inputs seem like a good idea? Does borrowing money from him seem like a good idea? Does borrowing money from the guy who buys your grain sound a sound plan? Go to a bank, a credit union or (Farm Credit Canada) to get your money,” he said.
“My advice? When it comes to advice you need to ensure there is no conflict of interest involved.”
Minogue said producers who buy a new combine or 80 foot air seeder for their 3,000 acre operation often can’t maximize the return on those tools unless they operate additional land as well.
When producers plan for new equipment they should make realistic plans about how many acres the machines can cover in a season. Then they can base land-operated decisions on the capacity of the equipment.
He said the inverse works as well.
“Decide on alternatives like having custom work done, rather than investing in more or larger equipment. If some of the least critical work can be performed on a fee-for-service basis, then that needs to be considered.”
