Agricultural profit is not the same as productivity. You can have a bumper yield/acre and still lose money. According to the USDA, net farm income is forecast to fall 6.8 percent relative to 2023 after adjusting for inflation. The decrease across the country amounts to $10.2 billion in lost revenue. (1) How is it affecting your farm or ranch’s net income?
There is an increase in agricultural land sales because farming is just not profitable. But you don’t want to sell your family’s land. That means you’ve got to figure out the economics to make it profitable.
Making Agriculture Profitable
First, start by changing your metric from yield/acre to profit/acre. That’s a major mindset change that makes all the difference in how you look at your land assets. That new mindset also helps you critically look at input costs and whether they are working for you.
Are you itemizing your input costs, including N, P, K, micronutrients, cost of fuel, and your time? Human capital in the form of free time to play with your children and grandchildren is priceless.
Sit down with a trusted crop consultant and review what worked for you in 2024 and what didn’t. With your itemized list and insights from 2024, you can make a plan for 2025.
What Are the Factors That Went into Crop Production in 2024?
Here are a few questions to ask yourself as you’re looking over those itemized input figures:
- Are there some acres that almost always underperform? If you’re renting some land that’s not profitable on an acre/acre basis, have you considered not renting it in 2025? If you own the land, how could you increase its profitability?
- What did soil tests at the beginning of the season and the end of the season reveal? You might be applying too much nitrogen or other input. That will show up in the soil test.
- How densely did you plant? What is the latest research on the most effective spacing for optimum agricultural profit?
- How did you apply nutrients? Was it the most effective method? Did you band or foliar fertilize? Both use fewer inputs.
- Did you follow the 3Rs? You can do everything right but if your timing’s off, you still won’t be profitable.
Of course, there are many more questions. Every farm or ranch will have a different set of questions. The more data you have, the better. Go back over a few years to look for patterns.
Are You an Outside-the-Box Thinker?
Are you willing to look outside the agriculture box? If you’ve been a row crop farmer and you’ve got some underproducing acres for row crops, can you put those acres to better use? Should you invest in some livestock, put in some specialty crops, or create a wildlife and pollinator habitat?
Have you spent some time thinking about markets for specialty crops? If you’ve never grown them before, there’s a learning curve, but that shouldn’t stop you from investigating this potentially lucrative option. Many crops have a much higher value/acre than the usual commodity crops. Ask your crop consultant about markets for non-GMO crops. The seeds are less expensive and the sell price is higher. The learning curve isn’t quite as steep as a brand new-to-you crop.
Regenerative agriculture has a learning curve, but that doesn’t mean you won’t make a profit. Cover crops, manures, and multi-year diverse crop rotations will replace the conventional two-year rotation of corn/soybean, cotton/soybean, corn, or the addition of wheat to your rotations. Your operation will profit from regenerative practices even in the short term. Are you willing to put in the time to learn all your options? In a rapidly changing consumer landscape, there are probably more options than you’ve ever considered.
Natural Fertilizers and Synthetic Fertilizers
If you don’t have livestock, you won’t have a ready source of manure. Incorporating livestock in your cropping rotation system on pasture improves soil structure for all row crops to follow and increases profitability on those crops. If you can document no synthetics applied to your pastures or row crops, you can market higher value products. Pasture-raised beef, pork, and chicken are all high-value cash crops.
Synthetic fertilizers are costly and don’t do your soil any good. They are a contributing factor to environmental degradation. Water pollution from excess synthetic inputs causes eutrophication in nearby water bodies, with major fish kills. In the long haul, they don’t even help your yields. Look at the volume/acre of fertilizers over the years. Have you had to increase the volume to get yield? Is that good business?
Synthetics cause unseen damage to your soil microbiome. Soil biodiversity is adversely affected by both tillage and synthetic inputs. The higher your fields’ organic matter content, the more nature will work for you. Fewer inputs equal higher profits.
What are the costs of cover crop seeds (which give you green manures) versus synthetic fertilizers and herbicides? There are both short-term and long-term costs and benefits. The benefits aren’t always obvious. But a reduction in insect damage is the result of beneficial prey insects and birds in habitat on the edges of your fields. Isn’t pest control one of your biggest costs?
Planning for Cropping in 2025
After reviewing all the data from 2024 and previous years, what’s a good plan going forward? A plan that works is a farming system you like. We all know if you don’t like it, you won’t do it. If you’re going to change practices, there may be some hiccups, but that happens if the weather isn’t exactly perfect. And extreme weather events are becoming the norm.
Evaluate your practices, determine what worked and what didn’t and why. When you put your focus on improving soil health, biological diversity, and maintaining soil cover, your input costs will decrease. Think about profit/acre instead of yield/acre. If you’re considering different markets for your crops, have you researched them and know the qualities and qualities required?
At the end of the year, reconsider if you need to buy that new tractor. A wise person once said, “Spend money on what makes you money. Debt load and equipment payments cut into profit.”
It’s a new age for farming and ranching in the United States and the world. We will still need grain distributors and silos, but for producers of non-GMO and specialty crops, farm profits may be higher.
At ST Biologicals we are here to help you calculate the costs of production versus profit. It’s crucial for the financial health of your operation now and into the future. Contact us so we can go over what worked, what didn’t, why, and how to plan for a profitable 2025. We’re here to help you succeed. When soil speaks, we listen.
