By Ben D. Johnson
Have you ever noticed that you always hear about high yields, but no one ever talks about high profits? If you think about what it takes to get these high yields you might find that these may not be the most profitable practices. Now, I’m not knocking high yields. If you aren’t experimenting on your farm you aren’t learning, but we have to understand their place. We are in times where margins are tight and the margin for error is very low.
If getting high yields is our strategy to drive farm profitability, we may not be looking at the right metrics to determine successful outcomes.
To look at this another way, think about baseball (or any sport). Baseball is notorious for accumulating statistics on just about everything imaginable. All those statistics are good to have, but there is one number that trumps them all and makes the rest almost irrelevant:
That’s right, you can have the pitcher with the lowest ERA or the hitter with the world record number of home runs, but at the end of the day the only thing that matters is if the team wins the actual game.
With that in mind, what is the only thing that matters in your farming operation?
That’s right, turning enough of a profit to stay in business until next year!
Now let’s look at what high yield really is: one single statistic. Is it a bad thing? Not necessarily, but typically to push for record yields you are either lucky with weather or you are being aggressive with your inputs and management practices. Inputs cost money and when you push high yields, you try to squeeze every last bushel out of the land that you can. When we think about the law of diminishing returns, this is problematic.
With the law of diminishing returns, there is a point where you can keep adding inputs and the yield will be going up, but it will cost more money than you will get in return. In other words, yield goes up, but it may be a bad investment.
At that point you have to ask yourself if bragging rights are worth those sleepless nights when you’re sweating up a storm thinking “how am I going to stay in business?”
You don’t even have to be pursuing high yields to be worried about staying in business next year.
Fortunately, we live in an exciting time in agriculture. With all the data we collect digitally we can now funnel it all into one place and start doing analysis that can point the way to increased profitability on the farm. With margins as tight as they are, that’s pretty good news!
Imagine what it would be like to have the data in the table below when evaluating your fungicide decision from the previous year.
You would be able to pick out your winners and losers at the end of the year easily. Then you could look through your imagery, as applied, and weather data to figure out why they were winners or losers. When you do that, you are better equipped in the future to make decisions based on data and facts versus emotions and that allows you to make the best choices you can.
Using high profitability instead of high yield as your benchmark for success may not be so easy to brag about in the coffee shop, but you will sure be sleeping better at night.