Selecting and Purchasing Ag Chemicals That Work for You
15 Feb 2023
There are some best practices to follow if you want to make a practical ag chemical plan that works. We’ve outlined some tips and tricks for how to put together your plan and then efficiently select and buy the best chemicals for that plan—without breaking the bank. How To Make An Ag Chem Plan You Can Use There is no one-size-fits-all chemical plan Depending on your crop rotation and tillage, as well soil types, pests and diseases, each farm has specific needs to address when developing a chemical plan. Finding the right pest management and weed control programs for your farm can seem like a daunting task, but thinking of them holistically can help you to develop a plan that will protect the yield potential you planted. What to Put Down: Selecting the Right Chemicals for Your Chem Plan Like all input decisions, deciding exactly what chemicals to purchase is a bit of a balancing act—figuring out what active ingredients your plan needs and when, and measuring that plan against the ease of ordering, delivery timing and cost (or in some cases, what it could cost you not to buy ). Here are a few things to consider as you start to create your chem plan: 1. Know Your Cropping Plan Crops have diverse needs and tolerate weed, insect and and disease pressures differently. And plantback intervals vary between crops, sometimes even for the same product. That’s why it’s important to know what you’re planting—so you don’t restrict yourself with a herbicide that has a plantback interval that may be too long to work. 2. Rotate Your Modes of Action It would be easy to just do what’s worked before, but we all know that eventually, any pest management program can lose its effectiveness. By making sure you’re utilizing multiple modes of action, you’ll be able to fight weeds in multiple growth stages and prevent any resistance issues that have become prevalent on farms across the country. 3. Consider Your Tillage Practices Be sure to take tillage into account as you’re creating your chem plan. No-till, reduced till, minimum till, ridge-till and full tillage may each require a different herbicide program. For example, are you planning to till your soil before planting? If that’s the case, then you may not need to use a burndown herbicide because any weeds will be pushed under from rotating soil. 4. Know Your Field History Knowing what weeds, insects and diseases you dealt with in previous years can help you select the products you will need this year to combat any threats that carried over. 5. Think Long Term Take into consideration the weeds and insects you may see in corn versus soybeans, as well as any other crop you may consider planting—a cover crop or specialty crop, for example. Don’t let a pest linger that will be a danger to the next crop in your rotation, or in planting something new down the road. Generics versus Branded Chemicals Whether you’re looking to buy peanut butter, pain relievers, or crop protection chemicals, a branded product from a company you know over a low-cost, no-name generic feels like the safe choice. But what’s the real difference between generic and branded ag chemicals? If the branded product is three times more expensive, is it also three times more effective? What does a branded chemical really add to your bottom line? Wondering how to start comparing? Our guide to understanding branded vs. generic ag chemicals will answer your common questions, including: What is a generic ag chemical? Do generic products work as well as the equivalent branded products? Are generic products identical to branded products? A generic ag chemical is manufactured and sold by a company other than the original manufacturer, but contains the same Active Ingredient(s). Generic chemicals are typically “off-patent”, meaning their original patent has expired. Thousands of farmers use generic products on hundreds of crops. While generic products are not identical to their branded equivalents, they tend to be very similar in terms of performance. In fact, to receive an EPA registration, a generic product must have the same technical make-up as the branded version. Often generic and branded products are even manufactured by the same companies. Generic products are not always identical, so it’s critical that farmers read their product labels to understand the differences. When to Put it Down: Timing Your Expected Applications Knowing your typical application types and when you traditionally have spray application windows is a significant part of developing a solid chem plan for your operation—when matters as much as where and how. By being aware of what, when, where and how works best for your farm, you can develop a plan that helps manage all of your pest control concerns while making the fewest number of passes necessary. The most common application windows are: Early pre-plant These applications are made 15-30 days before planting and are generally non-selective herbicides that burn down early weeds ahead of the planter. This is a good time to apply herbicides with residual control . If you do not plan to till your soil, or are in a reduced-till or minimum-till system, then a burndown can help you gain control of weeds that wouldn’t be destroyed by tillage. Pre-plant These applications are made in the window from 15 days prior to planting up until the planting date. This is an important window if you were unable to get into your fields for an early burndown and have a need to get moving with planting. Be careful with their herbicide choices here, as some herbicides have plantback restrictions that may prohibit them from being used so close to planting. This is also a good window for a soil-applied insecticide. Pre-emergence These applications are made after planting, but before plants emerge from the soil. These chemicals help manage any weeds that have popped up since pre-plant burndown applications, and can provide residual control for certain weeds until the crop has had time to get established. Post-emergence The post-emergence window includes anything that goes on once the crop is up and running. It is important to be aware of what the label specifies as the timing window, as this will help you get the most out of your in-season applications. A fungicide application is often usually made during this time (around VT-R1 growth stage in corn and R3-R4 growth stage in soybeans), and if insect pressure is a concern, many farmers will add an insecticide to their spray applications during this window. Harvest aids: This window is used to take down any late-season weeds that may make the crop more difficult to harvest. Selecting the Right Chemicals for Your Operation Premix versus Tank Mix Ag chemical products can come premixed or can be combined in a tank mix. Finding the right product mixes for your operation is important because mix type may help you to determine how much time and effort you want to spend prior to spraying. For premixes, the ratio of chemicals is prepared for the highest volume of use in a particular region. But for different climates and soil types, the optimal volume is not necessarily the highest volume, so be sure to read your labels and know the rates you want to apply. Also, when using a premix, the best application timing window for multiple products is usually determined by the combination ingredient ratios in the mix, which are developed by the manufacturer. However, this suggested timing may not always match up precisely with the ideal application timing for your farm, if you were to use the products included in the premix individually. So keep timing in mind when choosing a premix versus tank mix. Tank mixes provide more freedom to customize your mix. However, it becomes essential to have a thorough understanding of guidelines and labels for each product you plan to apply. Tank mixes require the ability to combine and handle the products properly, which is important to ensure uniform coverage and effective control. Improper mixing can be costly, particularly if the spray tank becomes clogged or damaged. How Much Chemical Do I Need? Figuring out how much chemical you need depends on the number of acres you plan to spray, what equipment you’ll be using and how many applications you’ll be making. All product labels will carry recommended application rates for each crop, timeframe and targeted pest. Need to Know on Chemical Rates The rate of chemical to apply to your crop is always included on the product’s label. The recommended rate is often based on the amount of active ingredient in the product, its intended use and the expected reaction to expect from plants based on the size of the area to be sprayed. Rates can also be described in pounds or volume of product per acre, depending on whether it is a liquid, granular or powdered substance. Watchouts for Equipment The equipment you use and how well it is calibrated will also play in to how much chemical you’ll need. While the proportions in your mixes will remain the same, you’ll have to consider if you’re measuring for a small backpack sprayer, a large boom sprayer or anything in between. The size of your tank impacts how much product you need to have on hand in any given application. Know Your Storage Needs The EPA has guidelines placed around the best practices for the storage of many agricultural chemicals, so making so you have the right space to store and protect your chemical investment is something to think about before you take receipt of it. Many pesticides come in a variety of formulations (dry or liquid), and an assortment of package sizes, from jugs and drums to larger totes and bulk tanks. With so many choices, be sure to know the space you have for what you’re going to buy — but know that you don’t always need to take receipt of chemicals on-farm at the moment you buy. You can often have them delivered with in several days of anticipated use. Trialing a New Chemical: Try a Strip Trial First On-farm field trials can help you gain valuable information about how well another chem application or different seed varieties may work on your fields without investing in it across the entire crop in the first year. The basis of an on-farm field trial is determining how a product/method/technology stacks up against another (or the absence) in the same field. Strip trials are just what they sound like—sections, or strips of a field, planted to different hybrids for comparison, or strips of a field treated differently to compare best management practices. The comparison among strips helps a farmer to determine which hybrid or practice would be most profitable and effective on all, or most, of their farms. When Should I Buy the Ag Chem for My Plan? Are you planning to use many of the same chemistries that performed well for you this year? If so, you are probably not the only farmer who wants to get their hands on them. Chemical Prices and Timing Herbicides and insecticides can account for as much as 15 percent of your variable cost of production.2 Every dollar matters—small price variations can add up to have a big impact. Purchasing your crop protection and chemicals in the fall can offer you two main advantages: Better Prices in the Fall This time of year, many products are often on sale to clear inventory for next year’s products. If they’re the ones you plan to use next year, you could save money and reduce your cost of production by taking advantage of lower prices in the fall. It’s not uncommon for the price of common chemistries used in grain production to increase each year. Some have predicted that input prices could go up 3-6 percent on many crop chemical inputs. Buying ag chemicals in the fall can be a smart move where price is concerned. Greater Certainty for the Spring If certain chemistries worked for you, chances are that other farmers may have had the same success, and the demand for those products may rise. Supply can become tight for popular products, but you can purchase now to avoid this possibility. Once you have the products in hand, you will not be panicking or searching for the products, if and when they become scarce. It is a good feeling to know the inputs you need are going to be there whenever you want to apply them. Buying products that you are certain that you will use this fall or the next crop year can help you to eliminate any potential for waste, and addresses your planned chemical needs upfront. There is often little transparency into industry practices around chemical pricing. With historically low commodity prices, even small differences in chemical prices can make or break a season. Based on our research and the experience of many FBN members, one of the biggest barriers to controlling costs is the variability and lack of transparency around ag chemical prices. You can see extreme price differences on the same products, even when brands and geographies are the same, and even for staple products: Price differences exist across the ag chemical industry, from widely used products like Roundup PowerMAX® to more specialty products. Price differences occur even within states for identical products. Farmers within 15 miles from one another can pay widely varying prices. Even as prices decrease for many chemicals, price variation continues to exist. You should have control over your chemical purchasing and greater transparency to make better decisions about where to find fair prices. Though the USDA does regular surveys on the amount that farmers spend on chemicals on average, very little is known about the real prices individual farmers pay. We believe that farmers should have access to fair and competitive input markets, and that increasing price transparency is a vital step towards that goal. The Easiest Way to Purchase Ag Chemicals FBN Direct ® lets you buy the critical inputs that you need to grow your crops. It’s lower cost, easy and convenient online ordering with seamless direct-to-farm delivery. Delivery is quick and convenient so you have the critical inputs you need, when you need them. We work directly with manufacturers and suppliers to procure high quality inputs at a fair price for you. Online Ordering from the Palm of Your Hand Chemicals and seed are delivered when and where you want. Direct-to farm ordering is simple, so you can spend time running your business. Shop for inputs and place your order right from your recliner. Or from the palm of your hand on the FBN App . It’s the hassle-free way to buy chemicals and seed, backed by price transparency. Sources Siekman, Darrel & Lowell, Sandell. “Comparing Generics vs Name Brand Pesticides”. University of Nebraska: Cropwatch Extension. 10/27/2008. Available here: http://cropwatch.unl.edu/archive/-/asset_publisher/VHeSpfv0Agju/content/888243 United States Department of Agriculture - Economic Research Service. Dips in Farm Sector Profitability Expected into 2016 ( http://www.ers.usda.gov/topics/farmeconomy/farm-sector-income-finances/highlights-from-the-farm-income-forecast.aspx ) Iowa State University: Estimated Costs of Crop Production in Iowa - 2016 ( https://www.extension.iastate.edu/agdm/crops/pdf/a1-20.pdf ) Herbicide Application Timing - When to Apply What ( https://agcommnetwork.com/herbicide-application-timing-when-to-apply-what ) Copyright © 2014 - 2023 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, “Farmers Business Network”, “FBN”, “FBN Direct” are trademarks, registered trademarks or service marks of Farmer's Business Network, Inc. Roundup PowerMAX® is a registered trademark of Bayer CropScience or their respective owners. FBN Direct products and services and other products distributed by FBN Direct are offered by FBN Inputs, LLC and are available only in states where FBN Inputs, LLC is licensed and where those products are registered for sale or use, if applicable. If applicable, please check with your local extension service to ensure registration status. Nothing contained on this page, including the prices listed should be construed as an offer for sale, or a sale of products. All products and prices are subject to change at any time and without notice. Terms and conditions apply. ALWAYS READ AND FOLLOW LABEL DIRECTIONS. It is a violation of federal and state law to use any pesticide product other than in accordance with its label. The distribution, sale and use of an unregistered pesticide is a violation of federal and/or state law and is strictly prohibited. We do not guarantee the accuracy of any information provided on this page or which is provided by us in any form. It is your responsibility to confirm prior to purchase and use that a product is labeled for your specific purposes, including, but not limited to, your target crop or pest and its compatibility with other products in a tank mix and that the usage of a product is otherwise consistent with federal, state and local laws. We reserve the right to restrict sales on a geographic basis in our sole discretion. You must have a valid applicator license to use restricted use pesticides. Please consult your state department of agriculture for complete rules and regulations on the use of restricted use pesticides, as some products require specific record-keeping requirements. All product recommendations and other information provided is for informational purposes only. It is not intended to be a substitute for consulting the product label or for specific agronomic, business, or professional advice. Where specific advice is necessary or appropriate, consult with a qualified advisor. Neither Farmer's Business Network Inc. nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in the material and any liability therefore is expressly disclaimed.
FBN® Poll Indicates 38% of Farmers Are Planning to Buy Farmland in Next Year
13 Feb 2023
A recent FBN® poll indicates that 38% of farmers are looking to buy farmland in the next year, with only 2% looking to sell. The poll, conducted via text message to FBN members on February 9, asked respondents, “In the next year, are you trying to buy farmland?” Available responses included: A: Yes B: No, prices are too high C: No, interest rates are too high D: No, I'm selling E: No, I’m not expanding Farmer Feedback Eliciting 3,867 total responses, the poll indicated that 60% of FBN members are not looking to buy farmland in the next 12 months. Of those who said they were not planning to buy land, the majority cited high prices as their primary reason not to buy, followed by high interest rates. [Interested in securing a land loan but not sure where to start? Access the free FBN guide "Ag Land Loans 101: Everything Farmers Need to Know About Securing Farm Land Financing" to learn more.] Financial Solutions from FBN Finance If you’re like the 38% of farmers interested in expanding their ag operation within the next year, FBN Finance has a wide range of available financing options to help you take that next step. If you are concerned about the higher interest rates, keep in mind rates are volatile and are predicted to come down in the near future. Quality land is hard to find, so don’t miss out once you find the right acreage for your operation. It may be worth considering securing a loan now and refinancing later when rates are more favorable. Connect with a FBN financial advisor today by clicking here , completing the form below, or calling 866-619-3080. Copyright © 2014 - 2023 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, “Farmers Business Network”, “FBN” are trademarks, registered trademarks or service marks of Farmer's Business Network, Inc. Financing offered by FBN Finance, LLC and its lending partners. Terms and conditions apply. To qualify, a borrower must be a member of Farmer’s Business Network, Inc. and meet all underwriting requirements. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify.
5 Ways Farmers Can Get Ready for Tax Season
22 Dec 2022
As the holidays wind down and the new year approaches, it’s a time for hopeful plans. But in the midst of all the cheer you face a looming responsibility—tax season. It’s a time of year most of us don’t look forward to—gathering receipts, remembering what expenses we had (but may have forgotten to write down!), preparing financial information for banks and lenders, budgeting for the coming year and making that appointment to meet with your CPA. This can all feel quite overwhelming! Here’s how you can prepare yourself for the tax deadline Every farming operation is different when it comes time to tax planning. Farmers should work with their accountant or advisor on determining the next best steps to take and what makes sense for their operation. “There are a lot of strategies farmers have for tax planning. Being very forward thinking and not thinking one year at a time is a good strategy. Commodity prices have been very good this year and it looks like they're going to continue to be good for the near term which will allow some profitability to hopefully continue over the next year or two. Farmers really need to be thinking about how this looks long-term for them. Making the right decisions right now will both protect their working capital and put their operation in the best position forward from a tax standpoint,” says TJ Wilson, Director of Sales for FBN® Finance. Here are the top five ways to prepare for tax time: 1. Identify sources of receipts During the year you receive money, property and/or services from many sources. Your records can identify the source of your receipts. You need this information to separate farm from non-farm receipts and taxable from nontaxable income. This helps your accountant properly report this information to the IRS. Gather your revenue receipts, invoices, checkbook and bank statements. You can use a simple code to delineate these items—such as “B” for business, “P” for personal and “?” for things you might be unsure about. This simple process will help your accountant quickly summarize information and figure out those with a “?”. 2. Flag business and personal expenses You want to get the greatest tax deduction possible, so you also need to identify all business expenses. You can use the same process as above—gather any expense receipts, credit card statements and your checkbook, and then take a few minutes to categorize expenses. This will make the process go much more quickly with your accountant—and may jog your memory as to anything you might have otherwise been overlooked. 3. Prepare financial statements Typically, financial statements have at least two components: a profit and loss (or income) statement and a balance sheet. If you’ve completed the above two steps, you’ll already have most of the information for the income statement. However, it’s also helpful to collect income information reported to you by other people – such as an employer (on Form W-2), a bank (typically on Form 1099-INT), the government (on Form 1099-G), or a cooperative (on a Form 1099-PATR). Typically these come in around the end of January. Additionally, you should set aside the following: bank statements as of December 31; purchase documents for equipment, trucks, livestock, etc.; and closing documents for any assets you purchased with a loan. This information, along with the income and expenses you identified in steps one and two, will aid in preparing complete and accurate financial statements. 4. Complete other tax information In addition to completing your tax returns, almost everyone who receives income from you also must prepare their own tax return. If you had people working for you during the year, you need to report to those people the amounts you paid to them for their services. For example, if someone worked for you as an employee, you’ll need to report the wages you paid to them on a W-2 and if you paid a contractor or service provider, you may need to send a Form 1099 to them. Again, your accountant can help you with filing the forms. 5. Keep supporting items for your tax return For this last step, the good news is you really don’t have to do much of anything! This is what the IRS would tell us: “You must keep your business records available at all times for inspection…If the IRS examines any of your tax returns, you may be asked to explain the items reported. A complete set of records will assist in the examination.” File paper items in a place for safekeeping and organize corresponding digital files as well. This way, you’ll have the information if you need to access it in the future. Bonus Tip: Deadlines To Remember Here are some of the important tax deadlines directly from the IRS for farmers to remember going into 2023: Tax Payment Deadline For Farmers Operating in the Calendar Year The tax payment deadline is January 17, 2023 The filing deadline is March 1, 2023 Tax Payment Deadline For Farmers Operating in a Fiscal Year The tax payment deadline is by the 15th day after the end of your tax year The filing deadline is the 1st day of the 3rd month after the end of your tax year Additional IRS Resources Farming and Fishing Income Form 1040-ES, Estimated Tax for Individuals (see page 3) Farmer's Tax Guide (For use in preparing 2022 Returns) Forms & Publications to Assist Farmers Copyright © 2014 - 2022 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, “Farmers Business Network” and “FBN” are trademarks, registered trademarks or service marks of Farmer's Business Network, Inc. *Financing offered by FBN Finance, LLC and its lending partners and is available only where FBN Finance, LLC is licensed. Terms and conditions apply. To qualify, a borrower must be a member of Farmer’s Business Network, Inc. and meet all underwriting requirements of FBN Finance, LLC and its lending partners. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify.
Canada’s Capacity Ready to Handle Record 2022 Harvest
12 Oct 2022
Canada is poised for a massive harvest this year, especially compared with the drought-reduced crop of 2021. Throughout the growing season, FBN® Research has been assessing whether Canada’s rail system and broader infrastructure will be prepared to handle a record crop. Based on previous capacity volumes for key grain crops including wheat, barley, canola, corn, oats, peas, flaxseed, soybeans and more, we are confident the country can handle a bin-busting record harvest. What if yields are max potential vs. history? To begin our analysis, we looked at planted area for 2022 compared to 2016 and 2020. In 2022, planted area for the aforementioned crops is higher. Next, to gauge what total harvested area could be, we applied the average harvest percent in 2016 through 2020 by crop to 2022’s planted area. By taking the maximum yield recorded across history for those crops and applying that to the 2022 forecast harvested area, we projected a production total. Based on those assumptions, we estimated a major grain production total of about 4 billion bushels; this is marginally larger than both the 2016 and 2020 totals. Assuming all of these crops hit the previous record yield, the total production outlook would not be at a volume that causes concerns about testing Canadian storage infrastructure. Can growers handle record-breaking harvest delivery and storage? If farmers are facing a four billion bushel crop, can the crop be managed by storage and delivery? Let’s first look at storage. The maximum stocks volume reported for commercial and farm was in December 2019 at around 72 MMT. Let’s assume we export an average of 5 MMT each month between August and December for a total of 25 MMT. Now, let’s assume we use around 25 MMT of grain over the course of those months as well (domestic use has exceeded 24 MMT between August and December in 2016, 2019, 2020, and 2021). This means 72 MMT of capacity + 25 MMT of exports + 25 MMT of use could be handled around harvest time. That translates to the need to handle 122 MMT of grain at harvest + roll over stocks. But, even at 122 MMT (using 36.7437 pounds/bushel as a generic conversion) gives us a capacity minimum of about 4.5+ billion bushels — which is well off the 2022 projected total and gives us room for rollover stocks (which are light this year). At this point, even with a 4 billion bushel or so crop, we believe Canada’s infrastructure can handle the anticipated record harvest. What does this mean for Canadian farmers? While Canada is expected to harvest a hefty crop, we are not overly concerned about that crop testing existing infrastructure. With light rollover stocks, storage use right now is probably at one of its lowest totals in years. We also anticipate a surge in exports as harvest season gains momentum. Copyright © 2015 - 2022 Farmer's Business Network Canada, Inc. All rights reserved. The sprout logo, "Farmers Business Network," and "FBN," are trademarks or registered trademarks of Farmer's Business Network, Inc. or its affiliates. The material provided is for educational purposes only and may contain forward-looking statements based on the beliefs of the authors as well as assumptions, expectations and projections made by and information currently available to them. Actual results may vary. Neither Farmer's Business Network Canada, Inc. nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in the material and any liability therefore is expressly disclaimed.
Will Emerging Carbon Markets Add Value for Farmers?
09 Feb 2022
When it comes to finding ways to reduce carbon, farming is often mentioned as a sector that has promise in reversing climate change. This is because farming practices – like cover crops and reduced tillage – can limit the release of carbon into the atmosphere by “sequestering” it in the soils. Unfortunately, policies and markets are still trying to evolve that will give needed price signals to farmers for adopting these practices. The idea of a market for “carbon sequestration services” is admittedly abstract, and the varying degree of state, national, and even international policies on carbon has created a difficult landscape for the development of a unified carbon market. Note: This article is based in part on the FBN® Roundtable discussion from January 20, 2021 moderated by FBN Chief Economist Kevin McNew and included panelists Dean Watson, President of POET Grain, US Representative (SD) Dusty Johnson, Steele Lorenz, Head FBN Sustainable and Brendan Jordan, VP Transportation, Great Plains Institute. Watch now Here, we distill the key factors that we believe will shape the future of Carbon Markets and Farming. Necessary pillars of a carbon market For a market to function properly it generally requires three key actors. These include: Consumers (or buyers) which have a need or desire for a product/service. Producers (or sellers) who can effectively deliver, make or create the product/service. Institutions that provide rules for fair trade, legal enforcement, or verification. In the case of carbon, the evolution of carbon markets has largely been focused on the service of “carbon sequestration”. In this context, the consumers of carbon sequestration services are companies that emit carbon as part of their operations. As society begins to impose costs on carbon emission through direct policies that limit carbon, companies must decide whether they will take steps to change their practices (which is costly), or “buy carbon offsets” from a supplier to meet their carbon reduction needs. Here, farmers are one such supply source for carbon sequestration. A company could potentially work with farmers, offering to pay for a set of practices that the farmer will undertake that yields a defined quantity of carbon removal. Hence, a market is born. Today, the market for carbon services is still at its infancy. The world’s first international emissions trading system started in Europe in 2005, which mandated compliance of certain sectors to reduce carbon emissions. This is what is often referred to as a “mandatory” carbon market as government policies require carbon reduction, and this regulatory obligation on companies creates a demand to pay for carbon reduction services. In the United States, regional examples of mandatory programs exist. California created a mandatory system and the Regional Greenhouse Gas Initiative (RGGI) was formed by 11 Northeast states, but today no overarching US system exists as in Europe. At the other end of the spectrum, you have “voluntary” carbon markets. Here, companies pledge to reduce their carbon footprint and these promises generally involve a mix of own-company emission reductions with additional reductions achieved through open market purchases of carbon offsets. Unlike a mandatory market, companies have no legal obligation to reduce carbon and as such their demand for carbon services could be viewed as less robust than those companies that fall under mandatory authorities. However, investor and societal pressure are signaling more companies to engage openly in carbon reduction making voluntary participation by companies necessary for future financial success. In this space, food and ag companies like Tyson, Unilever and Danone are just a few examples of companies actively engaging at the farm level around carbon in an effort to meet corporate sustainability goals. Drivers of carbon services: Grain buyers Today, grain buyers and end-users are still trying to find value in the carbon space. One avenue where there are direct linkages is in ethanol. Here, US ethanol manufacturers have a direct line into a carbon-tied market through California’s Low Carbon Fuel Standard. This policy scores motor fuels differently based on the carbon intensity of the product. Fuels that are produced with a low carbon score are rewarded versus high carbon fuels which are not. Under this yardstick of carbon intensity scoring, ethanol gets a fixed premium regardless of how the underlying feedstock was produced. POET, which buys around 1 billion bushels of US corn every year to make ethanol, in conjunction with FBN , has been advocating the California policies be adjusted to allow for a variable score that would be derived from practices used at the farm level. Corn produced from practices that reduce carbon (or what is deemed a low carbon intensity score) would fetch a premium, thereby giving the farmer a price signal to adopt more carbon friendly practices. To date, most of the effort by POET and other grain buyers has been around building an understanding between carbon intensity scores and farming practices. Indeed POET and FBN have been researching this issue with real-world farm trials. The results of these studies are impressive on two fronts: If you simply look at existing practices that corn farmers use today (or at least as represented by their sample of farms) then the carbon intensity score of the average is better off than what California currently pays today as a fixed rate for ethanol. In other words, by not taking into account existing agricultural practices of corn production, farmers are losing out on possible value. Even more important, if the California laws were optimized to reflect the carbon intensity of each unique farm’s practices, the potential rewards to a farmer would be impressive. POET and FBN found some premiums for low-carbon corn could be as high as $0.75 a bushel. Opportunities for farmers in evolving carbon markets So far, our discussion has mostly centered around the linkages up the chain to the fuel market. But in grain, are there opportunities from a carbon-based grain buying program for food and feed end-users? The answer is yes according to Steele Lorenz, FBN ’s Head of Sustainability. Companies are setting clear goals at reducing emissions and offering transparency about their progress. This is especially true for publicly traded companies. NASDAQ’ Environmental Standards Group reported that over 40% of Corporate Annual Reports they sampled had clear targets for greenhouse gas emissions. Today, FBN works in tandem with Tyson Foods around their goal to have 2 million crop acres used for feed grown with sustainable practices. While the food and feed space today may not have clear linkages to regulations which provide market-based incentives for carbon reduction, there are still important indirect consequences for companies that are not taking these steps. First, financial institutions like banks, investment firms and insurers are increasingly requiring or at least monitoring company metrics on these goals thereby signaling the importance that companies have demonstrated programs for carbon reduction. Second, while policies that drive carbon reduction may not exist today, they likely evolve in the future, giving early adopting companies a competitive edge if carbon regulations are enacted. Our view on the future of carbon markets and linkages back to farms for value creation is bullish. There is still much to be done around policies, institutions, and systems that will support the transmission of carbon value back to the farm but those necessary building blocks will likely be stood up in coming years. What will a farmer need to do? More than crop practices Carbon based markets for agriculture are still yet to be fully formed. Will carbon intensity of a farm product like corn be the attribute that is valued? Or will companies act to “buy” carbon sequestration services, and as such the amount of carbon sequestered by a farm will become the traded metric. These two paths of how carbon could be traded – as an “Attribute” using carbon intensity, or as a “Volume” based on the amount of carbon sequestered – are not necessarily restrictive in terms of companies or farmers choosing one or the other but they could involve subtle differences worth considering. In an Attribute system, carbon intensity becomes a verifiable and priceable metric assigned to every bushel of grain. This is not too dissimilar from how grain is treated today based on grades for moisture, protein, etc.. But here, the carbon intensity score must be verified based on the inputs and practices used. Farm records on farm fuel use, types of fertilizer and amounts are data points that will be necessary to verify and compute carbon intensity. Farming practices like tillage and cover cropping also play into scores. For a Volume system, which trades carbon as a financial asset directly, the farmer will need data and verification on tillage practices and cover crops. These will likely involve longer term commitments by the farmer to maintain those practices across a multi-year program, thereby assuring the buyer a fixed supply for a lengthy period of time. In contrast, an Attribute system will likely be tied to specific bushels sold and as such farmers could maintain flexibility around their willingness to participate. Regardless of which way a farmer goes, the cornerstone of either program will be data. This will start with machine readable data like what is generated from modern planter, applicator and harvester equipment. Those data sources will likely become industry requirements for participation and streamline verification and value creation back to the farm, so making those investments today may help reap benefits quickly once carbon markets develop. The material provided is for educational purposes only. It is not intended to be a substitute for specific individualized tax, business, legal, investment or professional advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner, or investment manager. Neither Farmer's Business Network, Inc. nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in the material and any liability therefore is expressly disclaimed. Copyright © 2014 - 2022 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, “Farmers Business Network”, “FBN”, “FBN Direct” are registered service marks of Farmer's Business Network, Inc.
Answering Your Questions About the FBN® App for POET Growers
09 Dec 2021
Community Builder of the Month: Alec Ibach
15 July 2021
Farming has always been in Alec Ibach’s blood. As a fifth generation farmer and rancher from Sumner, Nebraska, it seemed like he was destined to end up running a farm. After high school, he went to the University of Nebraska and majored in Animal Science. And after college, he went to work as an ag lender for four years. While that wasn’t his passion, it gave him some great experience outside the farm. Ultimately, Ibach says it taught him a lot of great lessons about what makes a good manager and what makes a poor manager. When Ibach did return to his family’s cow calf and row crop operation, he was better prepared to take on the responsibility of managing a diversified farm. So when his father took a government role in Washington, D.C., he was ready to manage the operation in his parents’ absence. Become an FBN ® Community Builder today To supplement his income while working on the family farm, Ibach decided to start his own seed business. He was introduced to the Community Builder Program through an old friend who convinced him to layer FBN 's crop protection and livestock products on top of his seed offering. Ibach says that buying through FBN has brought competition to the table and it has forced other suppliers to be aggressive and ultimately, that only helps farmers. FBN has become his sole chemical supplier. When he puts seed packages together and agronomy and spray recommendations, he uses FBN chemicals. "We’ve seen way more savings on the input side and being able to be competitive, you know, it just opened my eyes to the amount of money that can be saved when you’re buying through FBN ." One of the biggest hurdles he faces when talking to farmers is that they don’t always know what FBN does or what they offer. And Ibach is always quick to point out that it’s Farmers First ® and tries to do everything to help farmers or add value to their operations. Some of the big suppliers of pharmaceutical supplies will look at FBN as a competitor and disrupter but Ibach says that as a producer and Community Builder, his goal is to make tools more accessible and offer more competitive pricing for farmers. "On the chem side, we’ve really been able to expand our business and it’s really helped us as a business grow and become more financially stable. We’re a startup and it’s only our 3rd year as a business but being able to supplement that income is never a bad thing. I mean, that’s special to us." While he sees the benefits on the chem side of his business with direct shipping, he also sees the value that FBN is adding for livestock producers. “When you talk about livestock, I’m a cow calf producer, and when it comes to taking care of your animals and you have specifics like your ration, you have your mineral packs, you’re comfortable with those things and a lot of livestock guys haven’t switched those things in years. We’ve had the same mineral for 20 years until we switched to FBN .” And he only sees good things ahead for FBN in the livestock industry. He works closely with his Account Executive, Taylor, to continue building his business organically. But he knows it’s going to take time, and he’s hoping to make more people aware that he offers livestock products. “Being in a community and working with other producers is going to bring word of mouth and will eventually grow your business. You need the desire to go and work with customers and help farmers solve problems. You can be a tool in their toolkit that they can lean on. You’ve got to be willing to provide that service piece as a community person with local knowledge.” That’s what it means to be a community builder. Interested in diversifying your income? Become an FBN Community Builder today. Copyright © 2014 - 2021 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, “Farmers Business Network”, “FBN”, “FBN Direct” are registered service marks of Farmer's Business Network, Inc. Products sold or distributed through FBN Direct are offered by FBN Inputs, LLC and are available only in states where FBN Inputs, LLC is licensed and where those products are registered for sale or use, if applicable.
Guest Post: How to Finance Your Transition to Organic Farming
08 Sept 2020
At the end of the day, all farms run on numbers. Input costs, grain prices, land values—finances are an unavoidable part of any operation. Many growers look at organic farming as a possible income boost, thanks to the high premiums often seen in organic grain. But the financial aspect can also be one of the largest barriers to entry. The learning curve of new practices, combined with the 36-month transition period to get fields certified organic, can be daunting to the pocketbook. Finding a good lender for your organic transition That’s why it’s important to have a good lender who understands the challenges—not to mention potential for success—of going organic and can walk with you as you take your next steps. Want to know more about the finances of organic farming? So what are these lenders looking for? Here are few things to consider: 1. What is your plan? It doesn’t have to be set in stone, but the key is to show an awareness of what it’s going to take to get through the transition period. Banks want to see that you see the risks, have a plan to work through any learning curve and are comfortable starting small . 2. How much equity do you have? With recent low commodity prices, it’s tough to have enough cash laid away to make the transition stress-free. But if they’re going to lend you their money, banks need to see some built-up equity in the operation and/or your ground to leverage any losses. 3. Do you have a partnership? Whether it’s with an organic consultant—such as AgriSecure—or your banker, lenders want to know that you are willing to ask the right people for help and are realistic about your operation’s potential for the project. Get the support you need for your organic transition Some ag lenders have created options specifically for farmers interested in transitioning to organics. They know what it takes to make an organic operation successful, and their goal isn’t just to get you through the transition but to help your farm succeed—and create a legacy for years to come. If you need help creating a plan to transition to organic farming, contact AgriSecure today .
Guest Post: 3 Questions to Ask Before Transitioning to Organic Farming
25 June 2020
Given today’s market conditions, now might be the right time for you to consider transitioning acres to organic row crop production . Organic farming may not have seemed as feasible—or practical—when commodity markets were stronger. But as demand for organic food continues to trend higher, prices for organic corn, soybeans and wheat remain well above those of their conventional counterparts. This presents you with an opportunity to increase profit potential on your operation. Are organic row crops right for your farm? If you’re exploring a transition to organic, here are three questions you’ll want to ask yourself to help inform that decision: 1. Are your fields well suited for organic production? Fields that are larger, relatively flat and not irregular in shape are generally better for organic row crop production. This is because it’s easier to do tillage work on them as compared to fields that have a lot of point rows or extreme slopes. You’ll also want to be sure your fields include areas that don’t get too wet over prolonged periods of the season, especially around planting when you’ll need to get in to do fieldwork. 2. Can you build and sustain the necessary management capacity? Farmers who enjoy the most success with organic production have good management skills and are able to execute their plans. There are more details to oversee compared to a conventional system, too, and thus good management is a necessary component of a successful organic farm. 3. Are you willing to learn and adapt as you build an organic operation? Organic farming requires an open mind and a willingness to try new approaches. To be successful in organics over the long term, you may not be able to rely on some of the tried-and-true crop rotations employed in conventional farming. As with any venture that looks for new ways to achieve outstanding results, transitioning to organic farming depends on embracing the learning curve. Everything may not go as planned, especially not the first time, but there is almost always a suitable solution or workaround to be found. Want to know more about transitioning to organic? One of the key benefits that organic farming provides you is the ability to scale your operation in a way that makes sense for you. In fact, conventional crops and organics can both play a role on your operation—either for the short term or indefinitely. And if at any point you decide organics are not the right direction for your farm, you can easily return to a fully conventional operation. Initiating the transition process offers the opportunity to increase your margins and your profits in a range of market conditions. Get help evaluating your options and making a plan If you’re interested in transitioning acres to organic or expanding your current level of organic production, we strongly recommend that you work with an adviser like AgriSecure. No matter what stage you are in, it’s never too early—nor is it ever too late—to consult with experts who understand everything that goes into a successful transition to organic.
Guest Post: Ag's Role in the Climate Revolution—A Farmer2Farmer Recap
31 Dec 2019
Earlier this month at Farmer2Farmer V , POET Founder and CEO Jeff Broin presented alongside Farmers Business Network℠ CEO Amol Deshpande during a well-attended breakout session on agriculture and the climate revolution. Time constraints prevented them from addressing each and every audience question, so we figured we’d share responses to some of the top questions and concerns we heard in Omaha. POET Founder and CEO Jeff Broin presents alongside FBN CEO Amol Deshpande during "Agriculture's Critical Role in the Climate Revolution," a Lunch & Learn breakout session during Farmer2Farmer V in Omaha. Sustainability has become a critical issue for everyone, especially for those working in agriculture. How are farmers rewarded for adopting regenerative agriculture practices that can reduce and offset CO2 emissions, support the water cycle, etc.? The truth is this is still a work in progress. Farmers have historically been at the front lines as stewards of one of our most precious resources—the land. As Big Oil grew and took away our use of renewable products, farmers were put in a difficult position and developed a bad reputation. The oil industry spends billions of dollars each year perpetuating these false narratives. We need to work together to turn around this perception, which will position farmers to be rewarded for their hard work toward sustainability. Many of the rewards for farmers to practice sustainable agriculture come from their desire to leave the world a better place. We work with countless generational producers who have a desire to leave the soil and water in better shape for their children and grandchildren. While there are also some federal, state and local policies which provide incentives to farmers for practicing sustainable agriculture, there is certainly more that can be done. You acknowledged that agriculture is not the problem—we are the solution. How do we change the mindset so people recognize what we’re doing and what our potential is? What can we do to better align all our efforts around climate solutions? We need to work together across many industries with the same voice and same messaging. Associations like Growth Energy and U.S. Farmers and Ranchers Alliance are doing important work carrying our messages to policymakers, the media and the general public. Consider joining an organization, sharing your message on social media, donating to a Political Action Committee (PAC), reaching out to your elected officials and correcting any misinformation you may see or hear. To learn more about POET’s PAC, visit poetpac.com . Learn more about Growth Energy’s PAC at growthenergy.org/membership/growth-energy-pac . How can POET and other organizations realistically fight to reduce our dependence on oil when the oil industry controls so much money within our economy? What can we really do to effect change and bring market dependency back to agriculture? This is an important effort that takes lots of time, attention and financial resources. POET has team members dedicated to fighting this effort every day, and we’ve made progress over the years, including the approval of year-round E15 nationally earlier this summer and the approval of sales in NY state this fall. We are focused on telling our story to key audiences and engaging in the political process through direct meetings with the administration and Congress, but we need your help telling your story and financing the PACs that make this work possible. Government subsidies and “mandates” are two reasons the general public—including some farmers—are not on board with renewable fuels. But how big of a role do subsidies and mandates actually play in the profitability of renewables in general and, more specifically, ethanol? This is a common misconception about the biofuels industry and we need your help setting the record straight. Today, the grain-based ethanol industry receives zero federal subsidies. This is one of the reasons we’re a threat to the status quo. Meanwhile the oil industry gets billions in subsidies every year. If we can create a truly free market in the fuel industry, ethanol will win out over oil because we’re affordable, environmentally friendly and American-made. The United States is already ahead of many other countries when it comes to supporting a clean environment. How are we going to lead in a way that helps change the rest of the world? We need to be leaders in addressing climate change through sustainable agriculture and promote the impact that is achievable if we work together toward common goals. By sharing industry best practices globally, we can expedite needed changes that will help advance our climate goals. The U.S. has led and will continue to lead the way in agricultural practices, but with that comes the responsibility to help lift our peers across the globe. POET was recently part of a delegation representing biofuels and American farmers at the UN Climate Change Conference. The delegation used the opportunity to speak to the power of biofuels and agriculture as a solution to the climate crisis to countries around the world. In addition, POET’s nonprofit organization, Seeds of Change, works to provide education, increase the use of renewables and empower communities throughout the world. How can we get other farmers to use E15? Just as important, how can we get retailers to sell E15? Use higher blends of ethanol at the pump whenever possible and encourage your friends and family to do so as well! Ask your retailers for more ethanol and spread the word to use the fuels. Auto manufacturers will deliver the cars if consumers demand them and retailers will deliver the fuel if consumers demand them. Always be on the lookout for misconceptions and help correct the record when you run into misinformation. Learn more about POET's leadership in the biofuels industry Want to know more? You can subscribe to Vital, a free resource published by POET, to get additional biofuels news and ag industry content delivered to your doorstep or inbox. The views expressed in this article are the author's alone and not those of Farmer's Business Network, Inc., its affiliates or members.