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Cut your profit margins? | Rural Radio Network

Cut your profit margins?

Cut your profit margins?
John Schlageck is a leading commentator on agriculture and rural Kansas. Born and raised on a diversified farm in northwestern Kansas, his writing reflects a lifetime of experience, knowledge and passion. (Courtesy of Kansas Farm Bureau)

MANHATTAN, Kan. — The holidays are in full swing, winter has somewhat set in, although it’s not very cold and let’s keep it that way. Although the days remain shorter, farmers and ranchers are busy planning the new year.

Some may be dreaming about a wonderful winter wheat harvest while others are caring for their livestock and others may be preparing for the upcoming fall planting season. All of which, depend on whether we’re blessed with moisture.

During this period, it’s healthy to interject a little humor into the daily diet. A chuckle or comic relief is good for the mind and body. With that in mind, here’s my offering for the beginning of the New Year.

I’ve yet to meet a farmer or rancher who isn’t continually searching for new, innovative ways to make profits. This week, let’s peek at the opposite end of the spectrum. Here are 10 sure-fire ways to cut your profit margins.

  1. Blindly follow seasonal trends or patterns. If the market is going up – do not sell – it may go even higher. If the market is falling – do not sell – it may turn around and rocket back up.
  2. Never, under any circumstances, trust U.S. Department of Agriculture crop and livestock reports. From all the information available, these reports are “strictly legit.” But never mind. Discard these reports at all costs.
  3. Blame the big grain companies. Everyone knows they manipulate the farmer and make all the profits.
  4. Assume prices and costs are related. No place is it written that because you spend thousands of dollars an acre to produce irrigated corn, you are guaranteed a profit on your product.
  5. Hold the short crop because less corn, wheat, beans or milo must mean the price of these commodities will increase. In reality, by the time you hear a crop is in short supply, everyone else has heard the same news and the price has already gone up.
  6. Follow the majority. If your neighbor sells his corn, it is probably the right time for you to sell yours too. Ignore most conversation in the local coffee shop, the town hall or other meeting places. Figure out your own marketing strategy.
  7. Ignore the futures market and basis because everyone knows that a bunch of speculators are rigging the market. Remember, speculators lose money too and provide liquidity for the market.
  8. Never sell until you have a crop in the bin. Often, before you harvest a crop is the best time to lock in profits. Take a hard look at future contracting.
  9. Always, always shoot for the market high. Smart marketers have abandoned this philosophy for the goal of “shooting for higher.”
  10. When all else fails, blame your banker or your wife. You may just want to take a closer look at yourself and your production and marketing strategies.
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