Farm Management and Ag Policy

JayStratPlanning23 Transcript:

[Brad Mills, Program Host]
Nebraska Extension Almanac.

The volatile nature of the ag industry can make strategic planning for any operation a headache. Nebraska extension ranch management specialist Jay Parsons says successful operations have a solid foundation of planning, as well as good decision making under pressure, on today's almanac, he talks about how strategic planning can help producers chart a plan to success.

[Jay Parsons, Nebraska Extension Ranch Management Specialist]
Well, surprisingly, a lot of the stuff hasn't been done in the U.S. As far as studying producers implementing strategic planning and whether or not they're doing it successfully.

So at least the studies I was able to find were pretty much overseas or up in Canada.

So Peter Nuttall out of New Zealand's done quite a bit of work looking at managerial abilities of ag producers and different aspects of that.

And his survey, he was asking producers to rank, different attributes, that they think are important for management.

And surprisingly, having a clear vision of their missions and objectives and goals, uh, ranked, kind of in the middle of pack. Who's about 6 on their list of 15.

I think that they ended up ranking.

But things that were at the top were things that we'd expect to be there.

Like the ability to basically read the tea leaves, right?

See where the markets are going, see what's happening out there and reacting accordingly, where the type of things that made the top five.

And then there were some out of UK.

And, um, there was a study there on just general small businesses, small family uh, businesses in rural areas, um, and then uh, one that they looked at the actual uh, farmers themselves and uh, things that they uh, ranked up there.

It pretty much, you know, comes down to goals and objectives, right?

It's kind of the take-home point of things that they pointed out in there.

Um, you know, other things that you could do, like SWAT analysis, you know, strength, weaknesses, opportunities and threats and stuff like that kind of kind of weigh in there a little bit, but a lot of producers don't get to that level of it.

But they at least, I think one of the studies, there was 3 quarters and the other one, maybe 2 thirds, that actually said that they had a clear understanding of their goals and objectives.

Surprisingly, well, maybe not surprisingly.

Very few actually had them written down.

So it's more like 10 or 15%.

Just general planning tools, right?

So, so, you know, you think of crop farmers or crop rotations, you know, where they're going to put their crops in what years and how those rotations might work, same thing on the on the livestock side with grazing management plans and stuff like that.

That we might think of more traditional production planning tools.

Those are also part of your strategic plan, right?

Because a lot of times it has to do with basically machinery replacement decisions or machinery purchases, land, management decisions and so on.

So all of those are part of an overall strategic plan.

But then certainly cash flow projections and things like that, the financial side of it weighs in there too.

For the most part, people, you know, and Agar try to build their financial positions or their equity position.

So having good, you know, financial statements produced on a regular basis and just kind of goals of different metrics that you're trying to reach each year is important.

Farmers or ranchers spend a lot of time producing, right?

So they're sometimes they're on tractors, sometimes they're out on a horse or at a pickup or whatever.

And they think about things that they want to accomplish on their operation virtually every day, you know, several times a day.

Um, just take some time to think about some timelines.

You know, what is it?

How would I measure progress towards these things I want to accomplish?

And then take, you know, some time to write some stuff down.

You got to start someplace.

So you never really know what the key metrics are until you start thinking them through, right?

What is the right way to measure that I'm actually growing my business in the direction that I want it to go, reaching, uh, if you're wanting the next generation to take over, what kind of planning goes into that in terms of of getting those uh, young folks involved in the operation and finding a place for them to uh, operate and function and grow as a manager within the operation.

Lots of different things like that that you can think through and where you want your operation to be in five, 10, 15 years, and then just, you know, lay out some things that you would use to measure that you actually make in progress.

[Brad Mills, Program Host]
Today's program was a portion taken from a recent farmcast podcast offered by the University of Nebraska Center for Ag Profitability to hear the entire interview, go to cap.unl.edu or download from Apple iTunes. For Nebraska Extension Almanac. I'm Brad Mills. Nebraska Extension Almanac is a production of IANR media, and Nebraska Extension.

For more information on how your university is serving Nebraskans, go to extension.unl.edu.
 

[Brad Mills, Program Host]
Nebraska Extension Almanac

For the second year in a row, Nebraska's Ag land value has declined according to extension Ag economists, Jim Janssen. Those values reflect differently according to location and how the land is used. He talks about some of the key factors. Affecting AG real estate values. So in the state of Nebraska, the University of Nebraska Lincoln annually surveys land industry professionals across the state to evaluate changes in land values as well as cash rental rates.

[Jim Jansen, Nebraska Extension Ag Economist]
As part of recent findings from the University of Nebraska Lincoln Center for Agricultural Profitability. Farm real estate market survey and report findings indicated that the overall market value of land decreased approximately 1% to an average of $3,905 an acre, which is about 1% lower than the prior year.

With that being said, the market value of land is composed of two, uh, land classes you might call. One land class is a crop land side, whether irrigated or dry land, crop land. The other type of land is, uh, grazing land and hay land roughly half, a little over half the state is in grazing land or hay land.

The other half is cropland. Now what was reported and some of the trends indicated is the trends in the market value of land are actually reporting the profitability or the profitability expectations surrounding crop land versus grazing land. For example, the average market value of crop land declined slightly one to 2% for dry land cropland with or without irrigation potential, and maybe even a little bit more than that for the irrigated, for center pivot or, or, um.

Gravity irrigated cropland, which those declined about two to 3%. Now, for grazing land, which the profitability is a little bit different for the cow calf folks, or at least the expectation is that prices are fairly high and expectation. We might see fairly favorable prices for the fall of 2026 when one might consider selling cattle, or maybe after the first of the year if you choose to hold them that long.

We've seen an increase anywhere from five to 7%. Now that reflects a lot of a difference in the market value of land. So it's important when we're talking about the market value of land, what type of land are we reporting on, and also what area of the state are you in? Differences in the presence of livestock, even on the crop land side, when folks are having a good year on the, um, cattle side of, uh, cow calf peas.

Or if you're in the feedlot business, you might see some of those values get reflected in. Potential buyers buying land or evaluating land purchases in an area. So for the upcoming year, things to be keeping an eye on is where interest rates headed. That influences the cost of long-term borrowing, where input expenses headed seed, fertilizer, chemical on the cropland side, fuels also in consideration even for the cow calf folks.

And herbicide, yes, on if you raise hay or. Got, uh, grazing land, you might use various, uh, types of herbicides for things like that. And also the price of seed if you're on the cropland side, where, where's profitability headed. So we have to keep an eye on that. And obviously we're having a lot of challenges right now related to fire damages on, uh, some of the acreage that was unfortunately, uh, burned in the western part of the state.

What does recovery look like for that? And also what does profitability look like for the cow calf folks? So there's a lot of things to be keeping an eye on and unfortunately it looks like this year might be a dry year, and hopefully I'm wrong in saying that. And we start getting adequate moisture. I think everybody is short moisture to some degree, and, uh, small rainfall of any amount at this point would definitely help some of those folks in their recovery efforts.

Or even if you're on the grazing land side, uh, helping get some of that spring vegetation started growing. That'd be very useful. So to find more information on the Nebraska Farm Real Estate Market Survey and Report, visit the Center for Agricultural Profitability website at cap.unl.edu/realestate, no space real estate in one word for Nebraska Extension Almanac.

[Brad Mills, Program Host]
For Nebraska Extension Almanac, I'm Brad Mills, Nebraska Extension Almanac is a production of IANR Media Nebraska Extension. For more information on how your university is serving Nebraskans. Go to extension.unl.edu.