Producer Page: Check the Gauges

 

Do you remember when you were just starting out driving tractor and doing field work? I’m sure your Dad was like mine and said, “don’t just watch the implement and the field, make sure that you are checking the tractor gauges too.” His point being that even when you think things are sailing along, you need to be aware of potential problems and catch them before they become big.

 

Well, right now you may be thinking (and you would be right) that things have been going along really well in agriculture over the past few months. Prices have rallied and we were blessed with a bountiful harvest in 2020. But even in the good times, don’t forget to check your ‘financial gauges.’ The cost of production is creeping up (especially fertilizer), and by this next year it could be rent and other inputs as well. If you are not tracking closely, your cost of production on corn could rise to nearly $5/bu. It isn’t too soon to plan ahead for tax liabilities on the 2021 return, and begin to think about how you can negotiate a fair land rental agreement. How’s your marketing plan for 2021 and 2022? You will need to know cost of production to determine when and how to sell your crop. Do you have a good soil test program started on your farm?   With the cost of nutrients, it is vital to only apply what you need, where you need it.

 

This is a good time to pay down on some shorter-term debts to solidify your working capital, and resist the temptation to 'buy' your way out of a tax liability. Invest in equipment when you need it and when it enhances your business, not when you think all the neighbors are upgrading. Use the good times to brace for the bad times. That way when good opportunities and bargains present themselves, you are ready to take advantage of the situation. A longer-term perspective in management can be very stabilizing in business operations.

 

Take Care,

Mark

Producer Page

Check the Gauges 

 

Do you remember when you were just starting out driving tractor and doing field work? I’m sure your Dad was like mine and said, “don’t just watch the implement and the field, make sure that you are checking the tractor gauges too.” His point being that even when you think things are sailing along, you need to be aware of potential problems and catch them before they become big.

Well, right now you may be thinking (and you would be right) that things have been going along really well in agriculture over the past few months. Prices have rallied and we were blessed with a bountiful harvest in 2020. But even in the good times, don’t forget to check your ‘financial gauges.’ The cost of production is creeping up (especially fertilizer), and by this next year it could be rent and other inputs as well. If you are not tracking closely, your cost of production on corn could rise to nearly $5/bu. It isn’t too soon to plan ahead for tax liabilities on the 2021 return, and begin to think about how you can negotiate a fair land rental agreement. How’s your marketing plan for 2021 and 2022? You will need to know cost of production to determine when and how to sell your crop. Do you have a good soil test program started on your farm?   With the cost of nutrients, it is vital to only apply what you need, where you need it.

This is a good time to pay down on some shorter-term debts to solidify your working capital, and resist the temptation to 'buy' your way out of a tax liability. Invest in equipment when you need it and when it enhances your business, not when you think all the neighbors are upgrading. Use the good times to brace for the bad times. That way when good opportunities and bargains present themselves, you are ready to take advantage of the situation. A longer-term perspective in management can be very stabilizing in business operations.

Take Care,

Mark

_______________________________________________________________________________________________________________________________________________________________________________

 

Spring 2021

 

2021 has provided us with one of the most exceptional springs in memory for suitable days for field work. Soils were in great shape and, unusually for us, there were no wet areas to dodge or worries about compaction at planting time!!

But…..we do need some rain, and the dryness does lead to some things for us to watch out for at this time.

Emergence: Many corn fields seem to be coming up in pretty good shape but there could be some spotty stands due to the dryness in the germination zone. A more likely problem will be uneven emergence that puts a corn seedling a few days behind its neighbor. It can be hard for that plant to ever really catch up to its full potential. If you have issues with this it would be good to double check your planter and make sure of your planting depth consistency for the future. Soybeans are more forgiving of populations and stand but also were planted at an even drier time. All in all, we are off to a good start with our crops but it is always good to evaluate and learn.

Herbicide: This could be a problem for pre-emerge applications. In a lot of cases, there has not been enough rainfall to fully activate some of these products. Walk your fields to see if there are any escapes or pressures. If you can catch these early, it is much easier to react and control. And face it, we could all probably use the exercise of a nice morning walk out on our farmland that we have so much pride in!! Get a schedule set up….like a school bus route….where you are checking areas on particular days and frequencies. A good habit that will help you spot crop disease and insects problems on a timely basis as well.

Bins: As long as you are setting schedules, put your grain bins on this also. A lot of bins out in the country are empty by now, but those that are not should be checked every week now with warmer weather. Lots of dollars in those tin cans this year!!

Be Safe,

Mark

About Mark Warmka

Mark has worked at Peoples State Bank since 2003, serving as lead agricultural lending officer and bank Senior Vice President. He is also a member of the Board of Directors. Mark has an extensive background in the financial services industry, possessing both investment and insurance licensing and is fully accredited as a crop insurance agent.

He and his wife, Kate, an elementary teacher in Blue Earth, live on and manage the home farm near Easton. Their daughter, Amanda, is a Physician Assistant at UHD Hospital and daughter, Sara, is teaching and coaching at Fairmont Public Schools. 

You can reach Mark by email or at 507-553-3155.

» More blog posts by Mark here

Producer Page: FSA Commodity Loan Reminders

Dear Farm Customer,

I do hope that your harvest is winding down.....it's been a real challenging fall.

Please check out this information from the FSA office.  There is a change regarding CCC loans, please read carefully!

 

FSA Commodity Loan Reminders1024 1

 

Mark

 

Mark Producer Page headshotAbout Mark Warmka

Mark has worked at Peoples State Bank since 2003, serving as lead agricultural lending officer and bank Senior Vice President. He is also a member of the Board of Directors. Mark has an extensive background in the financial services industry, possessing both investment and insurance licensing and is fully accredited as a crop insurance agent.

He and his wife, Kate, an elementary teacher in Blue Earth, live on and manage the home farm near Easton. Their daughter, Amanda, is a Physician Assistant at UHD Hospital and daughter, Sara, is teaching and coaching at Fairmont Public Schools. 

You can reach Mark by email or at 507-553-3155.

» More blog posts by Mark here

Producer Page: New Year

Finally!!!---Most farmers were very happy to celebrate a New Year! 2018 was a tough one for many…..too much rain reduced yields and the grain markets didn’t cooperate either. As we look ahead to 2019, we can hope for better things, but need to take management steps to put our businesses in the best position possible. Winter is the time to review your systems of accounting, marketing, and risk management. Try to take a good honest look at everything to find weakness, as well as, strength. Write down some changes and goals for this year and make a plan to improve your operation. We all have things we can adjust and fine-tune, and in this economic environment it is really important to do so.

Tax Talk--- The new tax law has some significant changes and you will need to understand how these may affect you. Hopefully, you did some tax planning with your advisor before year end. There are changes to the standard deduction (increases) and personal exemptions (eliminated) and itemized deductions (some limitations). There is an increase in child tax credits. There is a whole new deduction for Qualified Business Income but the limitation of the Domestic Production Activities Deduction. This is a very complex issue and has many factors related to the calculation. You need to make sure you and your tax preparer understand this topic. Also big changes in how the depreciation process works, especially on the trade-in of equipment. The trade-in on many items will now be considered a sale, and the Section 179 expensing on the new item will be potentially larger. This can also have an effect on your social security tax and earnings history, so tread carefully. As always, tax simplification doesn’t really exist.   There may be some opportunities for reducing taxation, but make sure you are reviewing carefully.

Insurance Insight--- Make sure you get your 2018 production to your crop insurance professional. Also it would be wise to make sure your bushels are accurate and consistent for both crop insurance and the FSA office for the tariff payment.

Government Gear Grinding--- As you know, the government is in a partial shut-down. This impacts the FSA office. If you have not signed up yet for the MFP payment (tariff payment), please stay tuned and get to the office as soon as it re-opens. Be kind to the staff once you are there, it was not their fault for the interruption of service!

Feeling Stuck??---- Farming can be stressful! While you have the independence of being your own boss, you might be feeling a lot of responsibility for things and control of very little. Finances, production, family relationships are all things that can be sources of real stress. There are people who can help! The Minnesota Department of Agriculture and the University of Minnesota have resources for you. The Farm Helpline is staffed 24/7 at 833-600-2670 extension 1. You can use the U of MN website at www.z.umn.edu/stressresources. Ted Mathews is the Minnesota Rural Mental Health Counselor at 320-266-2390 (no cost-no paperwork). Don’t forget trusted family and friends and clergy. They care. Also local medical providers are there to help at all times. Remember that you are not alone and we all need help sometimes.

Bin Buddy--- Hey……remember me?   I am full of grain that you haven’t looked at in a while. Just imagine that I am full of dollar bills, and I bet you would visit me a lot more! I just might need a breath of fresh air from my bin fans. There are some quality concerns about this year’s crop, so watch it carefully!

Take care !

 

Mark

 

Mark Producer Page headshotAbout Mark Warmka

Mark has worked at Peoples State Bank since 2003, serving as lead agricultural lending officer and bank Senior Vice President. He is also a member of the Board of Directors. Mark has an extensive background in the financial services industry, possessing both investment and insurance licensing and is fully accredited as a crop insurance agent.

He and his wife, Kate, an elementary teacher in Blue Earth, live on and manage the home farm near Easton. Their daughter, Amanda, is a Physician Assistant at UHD Hospital and daughter, Sara, is teaching and coaching at Fairmont Public Schools. 

You can reach Mark by email or at 507-553-3155.

» More blog posts by Mark here