Anonymous commented that “We really want to know what goes on inside that ag head of yours though…For example, are you spreading any fertilizer this year and why or why not?”
“That ag head of yours.” Some would say that the wheel is still turning but the hamster is dead. Other might say that it’s like an Etch A Sketch that gets shaken up just about the time the picture starts to take shape. Some indicate that if I you stick your ear against my ear you can hear the ocean. But the question was asked……..Fertilizer.
I am not spreading any spring P or K this year. Last summer I purchased two years worth of potash from left over inventory and spread it on my wheat stubble after we double cropped the beans. It has been my practice to spread two years worth of fertilizer in the fall after harvest. So this takes me a theoretical three years until I would spread any P and K. However that is theoretical. I will get back to this.
In an email exchange this morning one of the comments I made to a group of consultants is that you need information a day or two before you realize you need it in these times. So you must read a lot and digest a lot of information that may or may not be all that important at the time. So you sit on what appears to be useless news or rumor until all at once something in the atmosphere causes all that news to come together and you feel you need to move.
We kept hearing that fertilizer was going up but it didn’t move that much this spring. Then when news of China buying a years supply of potash from Canada hit the wires, it became apparent that we were going higher we didn’t know when and how much. With all the talk of high input prices starting to happen around May/June of last year the question became what to do. With the wet spring, there was inventory sitting around that wasn’t going to get spread. Dealers had inventory that they were selling that they couldn’t replace for the sale price. You could buy it at about the same price you prepaid for it in January but you had to take delivery then. So you had to either spread or store it. Storing wasn’t an option.
I had the ground to spread it where I was going to spread fertilizer anyway last fall, had financing in place and did some quick math to see what the price change to interest charge was going to be and pulled the trigger.
So here I sit with 100% of my ground fertilized for this year’s crop and 50% for next year. That theoretical part is based on the assumption that my soil test and crop removal won’t be drastically out of line with my predictions based on past performance. Having said that I do know that I have issues that will need to be addressed on some fields but feel that I can weather the current price hike without hurting my yields any.
The trick now it the other 50%. We have a unique situation sitting itself up in the fertilizer world right now. Most dealers are upside down on their inventory. They are full with fertilizer that was purchased to high. They can’t sell it. And wholesalers are now full with much cheaper product and farmers aren’t buying or are buying very little. Something has to give somewhere at sometime.
This is where knowing what you need to know a day or two before you need to know it comes in play.
At some point one of two things is going to happen. Either dealers will get out of their product at some level of loss and move on or they will end up out of business. I am willing to guess that most will move it. However we still have the problem that dealers are going to have to make up that loss somewhere. And how are they going to do that?
My suggestion is that you get very chatty with your dealers. You need to be reading the tea leaves now to see what direction things will be headed as we move into mid summer. There will be opportunities to buy and you need to know if that opportunity is a good one. The first step in knowing that is to know your margin. Don’t end up upside down like the dealers did. Soil test and don’t over apply P and K and utilize VRT to maximize your fertility investment. Results this spring have shown a $20-$30/ac saving with VRT P and K. On a 1,000 acres that’s $30,000. Better in your pocket than someone else’s.
At TEPAP in 2007 the biggest things I learned was that top managers spend 2 hours a day reading. Reading papers, magazines and internet topics of things not related to crop production. Those things give them that “day or two” head start on knowing what they need to know before they need to know it. They also spend 20%of their time focusing on what they don’t need to do instead of what they think they need to do.
So with this in mind the question is really: What are you going to do about fertilizer for this spring? Are you spreading any this year? Why or why not?