From Commodity Prices to Grain Marketing and Beyond
In the inaugural AcreForward podcast, host and Taranis Chief Operating Officer, Mike DiPaola, sits down with Luke Carlson, Chairman of the Board for Central Valley Ag Cooperative (CVA), York, Nebraska, to discuss the ins and outs of technology’s role in value delivery.
With four divisions: agronomy, grain, feed, and energy, CVA understands the importance of delivering value to the farmers who not only make up their customer base and ownership, but who look back from the mirror each morning, as well. The cooperative sources and provides all the supply chain materials, logistics, and advisory services farmers need to operate efficiently and hedge their farming operations against outside influences.
Service Carlson says all are vested in the success of.
“First and foremost, I’m a farmer. I farm in east central Nebraska in the Platte River Valley, mostly irrigated corn and soybeans,” Carlson says. “But I’m also the chairman of CVA co-op, which has given me the opportunity to lead a group of farmer-owners to try to improve the practices that we use and supply the inputs that we need.”
Yield vs. ROI
“Global influences affect decisions that are made on the farm,” DiPaola says, adding the question, “How does a farmer assess these events and how do these impact the decisions they make for their operation?”
It’s no secret that there are considerable investments made in the operation of any farming enterprise and global events and influences weigh heavily on the investment choices farmers commit to. None of which are less impactful over the past 24 months than fertilizer.
“Fertilizer prices are falling right now, but farmers have to take a look at how much fertilizer they can apply before the rate of return begins to diminish,” Carlson adds. “You have to take it on an input-by-input basis. I know what the cost of applying fungicide is, but we really don’t know what the cost of not applying it is. Weighing those factors to determine which impact your cost of production, and determining what the right decision in that particular circumstance is where the challenges lie.”
And not all those decisions bear an economic weight. Return on investment often bears significant agronomic and marketing weights.
Carlson notes that for his operation, he utilizes a simple excel spreadsheet that determines his net income per acre, but that the black ink doesn’t always drive his planting decisions.
“I can tell you that this year corn looks a lot better than soybeans, but I have a rotation of one year of soybeans followed by two years of corn. I like to stay in that rotation,” he says. “So even though corn is more profitable this year, it’s worth something to me to keep that rotation of crops in place.”
For many farmers, gone are the days of planting, nurturing, and harvesting a crop only to take the offered price at the local elevator. As part of his role in helping the CVA cooperative of farmers find the value of their crop, Carlson places a heavy emphasis on marketing.
“Here in NE, locally, we are in a drought, so we had a pretty short corn crop. We also had weather events: wind and hail, that took a lot of bushels out of our local market. So that’s why we are seeing a positive basis today; we’ve got a really short corn crop locally and the bidding is heavy. The local market has to bid against the export market to keep those bushels local,” says Carlson. “We are trying to keep that grain here.”
But just as the decision of what to plant bears non-monetary consequences, the decision of what to sell and when is not always black and white.
The Root of Decision Making
The decisions made on a farming operation are vast in scale because the dynamics of a functioning farming operation are multilayered and complex. Farm advisors earn their keep 365 days a year.
“You (Carlson) just went through a lot of economics and we barely scratched the surface of grain marketing and haven’t even talked about stressors. When we paint the picture for folks who aren’t involved in farming, how many “jobs” do you do every day, Luke,” DiPaola asked.
Carlson shares that he is an agronomist, a frontline worker – the boots on the ground – HR, and the accountant…and that’s all in one day.
“I can tell you, a lot of times you…I…need an advisor to help take some of it off your plate, or at least let them help you make some of the decisions,” he says.
Marketing and agronomy are two areas that Carlson identifies as “not his forte”. Working with an advisor for each not only alleviates responsibility but some of the emotional stress that every farmer carries.
As the clock hands reach 5 p.m., a time that means little to farmers, Carlson says that work-life balance is always a lingering thought. He says that while he watches others his age enter a more comfortable phase of life with time to spend with their families, he’s reminded that there are very few accolades for farmers.
Giving the farmers they serve time with family, to rest and focus on other areas of the operation without the fear of missed opportunity or gain is a hallmark of a good farm advisor.
The team at CVA put farmers in the driver’s seat by being up-to-date and knowing what is happening in the industry. They vet new technologies and products to know what works and what doesn’t. A good advisor does the leg work, so the farmer doesn’t have to.
Buying your Season, Ground Truthing your Success
A farmer’s greatest challenge is putting the right seed on the right acre and then having the knowledge and access to the above and below ground technology that will allow that seed to reach its genetic yield potential. Knowing is half the battle, and achieving is the other half; arguably, the success of the entire season happens between the seed fingers and the furrow.
The decision can be daunting, but when knowledge is compiled, the decision becomes surmountable. The methods don’t have to be fancy or costly, they just require time and dedication.
Over the past several years Carlson has implemented test plots that trial as many as 36 hybrids, evaluating multiple hybrids from multiple companies in a side-by-side comparison.
“Everything I do in that plot helps me make the decision of what I’m going to plant next year because you get the information you need firsthand. It never fails, I always get postcards about company “A” beating company “B” and I just decided a long time ago that I had to evaluate on my own,” he says. “I share my information with the companies, and they really appreciate it because it lets them know how they stack up against the competition, and I get a real-time ground truthing for what I’m going to plant next year.”
In-season, knowing stand count health is a key post-plant indicator that Carlson uses to manage his nitrogen application and make input decisions throughout the season. A ground truth that Taranis is uniquely positioned to provide, giving advisors the ability to make a near real-time assessment of what is happening not just with every field but with every plant, to identify issues before they become yield robbers and input sponges.
“There’s so much data coming that will allow us to be better,” says DiPaola. “We talked about emotions and adapting, and I think we are just beginning to see the potential of how we can move every acre forward.”
Today, Taranis is growing through a vision leadership calls “land and expand”, a relationship-focused model that leverages the success of an area of operation to build growth and trust within a region. The efforts, akin to word of mouth marketing, are ground truthing not only the opportunity for technology to improve the value chain, but also the acceptance and trust that the company is building within the sector.
To listen to more of the conversation between Mike and Luke and catch other episodes with interesting people in the ag industry, subscribe to the AcreForward Podcast on Apple, Google or Spotify.