Joe Talks Farm Business on The Big Show
Joe Peiffer appeared on The Big Show yesterday, 3/17/2021, to talk with Andy Peterson about farm business. You can listen to the interview and read the transcript below.
Andy Petersen: Let’s talk a little ag business on The Big Show today with Joe Peiffer, Ag & Business Legal Strategies. Good friend of The Big Show and a long-time legal analyst for us, if you will, talking about different issues, mainly bankruptcy-wise, but expanding, it sounds like, the operation a little bit too, which we can talk about coming up.
Joe, for old crop folks, this is the time of year where final decisions are getting made on products to be used, supplements to be used, fertilizer to be used, that sort of thing. What are you talking to clients about in terms of guiding those decisions?
Key thing I talk to clients about all the time is business. Let’s get down. Do we know our cost of production? What does it cost us to produce a bushel of corn, a bushel of beans? That’s going to get down to having a budget, looking at that budget, and we’re going to be analyzing our farms on an enterprise basis on a farm-by-farm and even down to a field-by-field basis. If we’re going to use a product, let’s say a fungicide, is it going to make us money? If I’m only going to trade dollars, is that a good investment or not?
Joe Peiffer: Those are questions we have to look at one step at a time. But it’s important to know your costs. You can’t necessarily cut your costs so that you’ll make a profit significantly all the time. What could you do to increase yield? And by increasing yield, we can end up getting more net dollars. At the end of the day, we want net dollars in the bank. If all we do is end up spending money and ending up as less dollars in the bank, we haven’t done us any good. So it’s very careful you have to look at your position all the time.
AP: Don’t keep doing the same thing the same thing that you’ve been doing over and over again and expecting a different result.
JP: Einstein called that the definition of insanity, doing the same thing over and over and expecting a different result. It’s the same in farming. Farming’s not the same as it was when my father was farming through the eighties. It wasn’t the same in the eighties as it was in the sixties. When my father left the farm, he was… At the time, if you’ve got 150 bushels of corn in the mid eighties, it was a bin buster crop. Today, the established yield in many counties is far above that. We’re looking at 180 plus, and we’ve only moved 40 years. But we’ve increased that by over 25% from a bin buster up, and the established yields keep going up because of many things we’re doing differently. The genetics are better. The fertilization is better. The practices are better. We’ve learned so much more and there’s a lot of room for growth.
This is a year where the opportunity to make a lot of money is there in farming, looking at what you can do in your marketing and other things. So you might want to be thinking about your marketing too. If you are a livestock producer, you’re going to want to lock in the cost of your grain, your inputs. You want to lock in a top, and if there’s a way that there’s a dip in the market you can lower those costs, work with your marketing analysts to help you there.
If you’re a grain producer, you want to lock in a floor. You don’t want to just lock it in so that you can’t ever go up. You need a floor to stay in business, but if the price can go up, you want to take that. You may end up having to share some of that with somebody else on the marketing side. But if you could get part of the up and keep a floor, you’re better off than if you just keep a floor. That gets into detailed marketing strategies, but candidly, there are people like Jamey Kohake and many others know a lot more about than I’ll ever know.
AP: Absolutely. Jamey does a great job. Always enjoy visiting with him, Joe. Finally, before we get going, I mentioned earlier that Ag & Business Legal Strategies is, your vision for this, I guess, is expanding also.
JP: Correct. Yeah. We’re spending a lot of time now working with farmers, and one of the people we have on staff is Keith Starr. He’s our Chief Financial Strategist. He was an ag banker for 30 years. He helps the people that are clients of the office sit down and analyze their business carefully. Is my enterprise raising corn, raising soybeans, raising pigs, raising a beef or dairy making money? Then we’ll split it down. Within the corn… are we paying too much rent for this farm versus that farm?
And it’s really important that people look carefully at their business and get down into the numbers. You need to get into the weeds with somebody who will hold you accountable and make sure that you’re not a liar that figures. The old saying is “Figures don’t lie. It’s liars that figure.” Keith’s going to keep you honest and making sure that these numbers are defensible. If they’re not defensible, why are you doing it and what changes are you going to make strategically? Do you have a budget? Can you stick to it? Can you pivot? That’s what he loves to do.
AP: Absolutely. That’s the old, “There’s lies, damn lies, and statistics” saying.
JP: Correct. Absolutely. It’s hard as a business owner to be as objective as you need to be. Farmers are cockeyed optimist, let’s face it. Next year’s going to be better. Next year going to be better. Next year’s going to be better. Is next year better because I changed and pivoted, or is next year better because of dumb luck? I’d rather change and pivot then bet on dumb luck.
AP: Absolutely. As always, Joe, good to visit with you. Thanks for your time here on The Big Show.
JP: Have a great day.
AP: Yep. Joe Peiffer will visit again here soon. Ag & Business Legal Strategies talking some ag business here today on The Big Show.