Agronomy
I got an SBA EIDL loan 3.75% back in July for $500,000 I could up the amount to $2,000,000 . Wondering if I should buy the next two years worth of fertilizer fuel and crop protection for a 4500 acre crop farm. 1/2 corn 1/4 each wheat and beans.
13
The interest is cheap. Fertilizer cost should be higher by spring than the interest will cost. The bigger issue may be the lack of availability in spring. But if you work with one of your retailers that can’t stand to make any money off fertilizer then you could lock it in and pay and likely they would store it for you. There was a early buy offered last week on UAN and it’s already high priced...
Are you going to save/many more than the interest costs to borrow that money? Consider that
Doesn’t sound like you have the money if interest is involved!
Where would this risk taking leave your family if you are not around?
1
Financing aside, I wouldn’t want to lock in today’s prices for two years out. Maybe we’ll be higher, but we’ve already seen a historically quick run-up, and time tends to moderate those drastic swings. Maybe lock in a percentage for future delivery. I wouldn’t want to hold the physical product either, but I’m risk averse.
1
No. Look at pivot bio for you nitrogen needs instead. Used it this year and was happy with it.
1
Hell no
3
I would be comfortable putting p and k in the dirt, but would be very Leary of trying to store N.
2
Absolutely.
2
Nope. No way would the risk to store and hold it that long be a good idea IMO. If you think it pencils out and are comfortable with it then full steam ahead.
3
You are 9 months late for purchasing inputs at lower costs. Getting 22 crop year inputs and taking possession would ensure you have what you need. Availability will be a problem on items and nobody knows what those will be. Fertilizer does not store well over 6-8 months for urea or 28% and some chemicals will separate and settle out as well.
4
I have hopper bins, and tanks and can take physical delivery. I would do the carry forward as a net operating loss on taxes and sell the 2022 cro off the combine for 4.75 cash corn and 6 dollar spring wheat. Lots of income in 2022. It would wash out in the end.
2
I would be careful prepaying that many inputs as it could have tax consequences for prepaying too large of a percentage of your costs. Also that 3.75% seems high compared to getting a regular operating loan or financing through a retailer's credit program.
2
EIDL is a 30-year note through the SBA. very cheap operating money