Farmers make critical decisions in a risky, ever-changing environment. The consequences generally are not known when those decisions are made, and outcomes can easily be extremely better or worse than expected. As profit margins continue to decrease due to the rising costs of operating a farm, it is increasingly important to be as efficient as ever in the farming industry.
According to U.S. Department of Agriculture, the national net farm income forecast is down 9 percent to $62.3 billion in 2017. This forecast represents the fourth consecutive year of decline from 2013’s record high of $123.7 billion and would be the lowest since 2002.
Whether you own a small or large farm, there are three ways to improve efficiency to help keep operational costs down.
1. Precision agriculture. Field management practices make production significantly more efficient. As stated by the Soil Science Society of America, “with precision agriculture, farmers and soils work better, not harder.” Using precision agriculture techniques, growers can manage larger fields as if they were a collection of smaller fields, reducing the misapplication of products and increasing overall crop and farm efficiency.
Farmers also use these practices to apply nutrients, water, seed and other agricultural inputs to grow more crops in a wide range of soil environments. They use research about weather patterns, soil temperature and humidity, growth and other factors. They rotate crops to improve diversity, and monitor irrigation rates so salts do not accumulate. Precision agriculture can help farmers know how much and when to apply these inputs.
Farmers deploy a wide range of technological tools to help them with these practices in order to make modern agriculture more efficient. For example, some farmers use global positioning systems and GPS-computer guided tractors and harvesters. The GPS aids in planting accurate rows of crops, as well as applying fertilizers. Other geo-referenced site-specific practices may include electromagnetic soil mapping, crop yield data collection, aerial imagery, drainage levels and potential yields.
2. Mixture of crops and integrating livestock. When growing a single crop, it may result in a large yield but there’s a good chance the ecological space – the land and water – are not being utilized efficiently.
Yield is how much of a single crop you can get per unit area – for example, bushels of soybeans per acre. That’s a measure only relevant to monocultures. A monoculture is when a single crop is grown in a field, rather than the combination of crops and animals that are associated with small farms.
In monocultures, you have rows of one crop with bare dirt between them. In ecological terms, that bare dirt is empty niche space. It’s going to be invaded by weeds. If weeds take over that space, the farmer has to invest in labor, spray herbicides or till the weeds. Farmers who manage larger fields generally work within monocultures because they are easier to manage mechanically.
Farmers of smaller fields tend to have crop mixtures. Their planting practices are to alternate different crops and eliminate the ecological niche space, producing something of use to the farmer rather than requiring an investment of more labor, money or herbicides. That means the smaller farm with the more complex farming system gets more total production per unit area, because it is using more of the available niche space.
Small farmers also benefit by integrating crops and livestock. By rotating pasture and planted fields, animal manure is used as fertilizer. The part of the crop that is not consumed by humans, such as a corn stalk, is food for the animals. The recycling of nutrients and biomass within the system makes the process more efficient and productive.
Every aspect of farming, regardless of the size or kind of farm, is expensive. Farmers learn quickly the importance of working efficiently, and there are some best practices they can put into place.
3. Establish a revolving line of credit. Agricultural loans help farmers run more efficiently. It can be difficult to keep up with all of the costs associated with running a farm, so farmers sometimes need agricultural loans to help them stay ahead in planning. Agricultural loans can help farmers purchase farmland, cover operating expenses, market products, and make equipment and livestock purchases.
One way to provide flexibility when making a quick purchase is to set up a revolving line of credit. This helps efficiencies by reducing wait times and helps manage the day-to-day expenses of running the farm.
Wade Robson is a commercial and agricultural lender for Arvest Bank in Branson. He can be reached at wrobson@arvest.com.
