December 2014
Farm & Field

Ag Producers Front and Center

Information on leading producers presented at American Society of Agricultural Consultants annual meeting.

The characteristics and practices of the nation’s top agricultural producers were front and center at the recent annual meeting of the American Society of Agricultural Consultants when Jeanne Bernick, an editor of Top Producer magazine, reviewed information her publication has gathered about their readers and commercial farms in general.

Among other things, commercial farms with annual sales of $250,000 or more are just 12 percent of all farm numbers, but they account for 89 percent of the dollar volume of all farm production.

Those percentages vary considerably by commodity, but a clearer picture of the economic impact of larger operations emerges from figures measuring farm production expenditures. For example, from 2001 to 2012:

Annual farm production expenditures increased more than 80 percent, with commercial farms accounting for all of the growth.

Ag chemical expenditures grew 59 percent, with commercial farms again accounting for all of the increase.

Commercial farms also were responsible for almost all of the near tripling of fertilizer, lime and soil conditioner expenditures, and the more than 100 percent rise in both seed and plant and farm equipment expenditures.

This year’s drop in the prices of many commodities will have a major impact on many of those farming operations, Bernick said. And while earlier good years could have led to a healthy increase in working capital adequate to weather the downturn, many producers reinvested the higher income from that period as a tax avoidance strategy.

However, research from a sampling of Top Producer readers late this summer provided indicators of how these farmers manage their operations in a volatile environment. According to Bernick, survey findings from this producer group included the following:

Twenty-two percent have more than one enterprise and use diverse entities as a way of spreading risk. Bernick cited as examples a producer who farms 20,000 acres in 11 states, one with 30,000 acres in Illinois and Brazil, and one with 12,000 acres in row crops as well as hog, cattle and dairy operations.

One third reported their farm/ranch has purchased or leased more land during the past year and 22 percent said they will do the same next year.

Thirty percent expect their acreage to increase by at least 15 percent in the next 5 years. Anticipated acreage growth increases with size; those with $1 million or more in revenue anticipate a 37 percent jump in acreage.

More and more rely on technology as a tool for higher yields, with nearly 70 percent owning or leasing yield monitors, 38 percent using variable-rate controllers and/or 32 percent employing satellite guidance systems.

Other yield-increasing investments planned in 2015 include drainage, irrigation, nitrogen management and scouting.

While 63 percent still use local banks, the number using agri-finance institutions as a lending source is growing.

Bernick added the sample group shares many of the same concerns that other business operators have such as regulation and other government pressures, risk management and profitability, succession planning, identifying opportunities for growth and employee management.

The survey also had good news for the ASAC group. Leading producers recognize they need help and, during the past 3 years, have hired outside consultants to assist them in various ways. Areas in which expertise has been sought include accounting, 46 percent; crop protection, 36 percent; marketing, 26 percent; scouting, 24 percent; succession plans, 16 percent; and human resources, 11 percent.