The sucking sound you hear is likely coming from your bank account. With harvest approaching, this is the prime time for unexpected, unbudgeted expenses.
How do you spend money? Let me count the ways. (Apologies to Shakespeare.)
It’s a big year for fungicide use. Name the crop and there’s a disease threat and a potential reason to make a fungicide application.
Someone no doubt has official stats on this, but there’s little doubt that fungicide expenditures in Western Canada have increased dramatically in recent years.
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Fungicides are largely preventive, which limits the personal satisfaction. If you’re killing weeds or insects, at least you can see what you’ve accomplished. When you spray a fungicide, it’s in the hope that you won’t see much disease.
It’s logical to make fungicides a priority when yield potential is good and crop prices are strong, but it’s still a drain on the bank account. No doubt, many producers have made fungicide applications that weren’t budgeted.
There can also be surprises from the insect world.
This summer, many producers had to spray to control aphids in their lentil crops. Aphids are sometimes problematic in peas, but this year there were hoards of the little green suckers in lentils as well. No one expected that.
Insecticide is cheaper than fungicide, but it’s still a cost.
And when you make a pre-harvest treatment on your lentils, it’ll be diquat (Reglone) rather than glyphosate because of concerns that have arisen in Europe over glyphosate residue. Reglone is a lot more expensive than glyphosate.
If your crop is looking good, you might have topped up your hail insurance coverage. Many producers try to match their coverage to the estimated value of the crop in the field. That makes it easier to sleep at night, but it comes with a price tag.
This is also the season for machinery repairs and there can be some nasty surprises, particularly on the combine. And if you have a big crop to harvest, you’re more likely to replace that feeder house chain than thinking it can go one more year.
Money easily flows out of the farm bank account, but maintaining your projected in-flow can be difficult.
On Canadian Pacific Railway lines, there’s a lot of last year’s wheat and durum left to deliver.
Non-CWB grain deliveries are often delayed, even when a date is specified on a contract. As well, payment can sometimes be slow to arrive when the crop is finally shipped.
Most everyone does their cropping budgets at the beginning of the growing season. Each expense is estimated. Most producers also do cash flow projections based on when expenses will need to be paid and when money will arrive from old crop grain sales. Gaps are typically bridged with operating loans.
The first harvest operations aren’t far away. Combines will soon be rolling in winter wheat, peas and lentils, but it’ll be quite some time before any significant amount of cash starts to flow from sales of the new crop.
Before that happens, the bank account could be much leaner than expected or the operating loan might be significantly higher than expected if you’ve incurred extra expenses this summer.
The lesson in all this is that projections need to be regularly adjusted. Sometimes you have to spend money in the hopes of making money, even if it throws your budget out of kilter.
Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at kevin@hursh.ca .
