Although this is a busy time production wise, do some calculations to determine whether you are on budget. Share your updated budget or plan with your lender. If there are cash flow problems, your lender needs to know early to explore alternatives. If you wait until the end of the year or when your production loan is due, the alternatives narrow considerably.
The mid-year point is a good time to perform a financial checkup. It seems each year that the majority of the investment in the crop is front-loaded. How much do you have in your crop and operation, and how does it compare to what you projected or anticipated?
Some bills may not have been received yet or possibly are deferred depending on the financing program. However, producers should have a handle on what is invested in the crop.
Updating your records through the month of June will allow you to quickly note your financial progress by comparing your actual expenses and also income to what you projected. Use realistic prices and yields on your income projections. Prices may have come down from where you projected earlier in the year. Use prices that have been booked averaged in with more conservative prices that may be offered at harvest. Any major differences should be noted and explained as to the difference.
If the crop mix that was planted differs much from what was planned and what your cash flow plans were based on, then an overall update on your plan is warranted. Based on the June 30 USDA Acreage report, there does not appear to be a major difference in what Tennessee producers intended in March and what they now estimate planting in June.
When reviewing your income and expenses to date, also compare your production line of credit as to what you have used, amount left to use, and how much you will need. If equipment or land payments have to be made, don’t forget to account for them. Will you need to borrow additional money due to unplanned expenses?
A glance at Tennessee acreage
Producers do appear to not have gotten as much cotton planted as they would have liked as the acreage report indicates in Tennessee, 250,000 acres were planted, down 30,000 acres or 10.7 percent from March intentions. This bucks the nationwide trend where 11.4 million acres were planted compared to March intentions of 11.1 million acres. Compared to March planting intentions in Tennessee, corn at 820,000 acres only lacked 10,000 acres or 1.2 percent from reaching the intended mark. The trend nationwide was somewhat similar as 91.6 million acres were planted compared to intentions of 91.7 million acres.
In Tennessee, soybean acres dropped 20,000 acres from March intentions to 1.580 million acres while the nationwide trend was the opposite. In the U.S., a record 84.8 million acres of soybeans is estimated compared to intentions three months ago of 81.5 million acres. On the average, producers in Tennessee do not appear to have greatly altered their production plans.
I would estimate that by June to early July, producers will have invested in their corn 79 percent of their variable or cash costs, cotton 71 percent, and soybeans 60 percent. These percentages are lower than previous years and can somewhat be attributed to the fact that producers continue to battle many weed problems through the month of July.
If we can assist you with budgeting, marketing or whole farm planning, please contact your local County Extension office or in Tennessee call the MANAGEment Information line at 1-800-345-0561.
Please join us for the Milan No-Till Field on July 24 in Milan, Tennessee. I will be in the Ag Museum on the “Farmers vs. Hunger” tour so stop by and cool off and help us package a macaroni, cheeses, and soy protein meal that will benefit the West Tennessee area.