Podcast: How Do You Win in Tough Times?

Mike Boehlje, distinguished professor of agricultural economics at Purdue University
Aired: November/December 2016

With market pressure expected to continue for the next few years, Mike Boehlje, distinguished professor of agricultural economics at Purdue University, encourages growers to focus on what they can control—and remember that they have tackled tough economic times before. “It’s time to pull out the old playbook, dust it off and become better about minding the details and making precise management decisions as we did under previous economic pressures.”

Economists are optimistic about the long-term future, maintains Boehlje. Until then, growers need to focus on reducing per-bushel costs to maintain profits and working capital.

“Our analysis shows continued tight margins through much of this decade, unless something unexpected happens to soybean demand or big issues with supply,” says Boehlje. “Our recommendation is to focus is on controlling costs and being a best-in-class, low-cost producer.”

Key Takeaways:
1. Do everything better. Establish a standard operating procedure for more precise management of each acre. Get smarter about your rates and timing on inputs.
2. Buy right. Comparison shop. Look at spec sheets, but also consider value-added services and support you’ll get in the event something goes wrong.
3. Maintain your working capital. Evaluate your loan terms against your repayment capacity. In many cases, 10-year loans on farmland and three- to five-year terms on equipment may be too short for today’s economic conditions.

Above all, work to position yourself for the challenges and the opportunities of this economy. “Don’t try to predict the future or the market, instead try to position yourself and stay resilient,” he suggests.

This interview was conducted as part of the ILSoyAdvisor.com Profitability Radio series, sponsored in part by your Illinois Soybean Association checkoff program.