Volume 18 Issue 6 November 2008

OFFICIAL PUBLICATION OF CROP QUEST AGRONOMIC SERVICES, INC.

A BRIGHT SPOT IN A BLEAK ECONOMY

If the financial news is better for the agriculture industry relative to just about every other sector of the economy it still doesnt mean the light at the end of the tunnel is any more visible for farmers and producers than for the rest of America. Over the last two years, for example, fertilizer costs have doubled and prices continue to rise. As crop producers plan for their 2009 fertilizer requirements, theyre learning that suppliers want a larger portion of the commitment paid upfront 100% in some cases. The credit function of these transactions, according to Terry Francl, Senior Economist at the American Farm Bureau Federation, is shifting from the fertilizer producers and dealers to the farmers. The net result, says Francl, is increased cost for the farmers. Unlike the rest of the economy, however, the credit crunch does not form the epicenter of the financial difficulties afflicting the agriculture industry. Instead, the high price of energy worldwide, Francl cautions, will reduce the export demand for agriculture products and ingredients and ultimately affect farms prices. Likewise, a slower domestic economy would also weigh on the demand for farm commodities and prices, he explains. Credit isnt a factor, either, in transactions when farmers sell commodities to elevators and processors. Farmers are not being asked to provide more credit, says Francl, but they are being offered a lower price generally due to the higher basis the difference between the futures price and the local cash price. farm level, is in good shape. The overall agriculture balance sheet is very strong and the USDA is projecting record high farm income for 2008. He also cites an enviably low debt-to-asset ratio of 10% as cause for optimism among farmers. The USDA reports farmer debt is the lowest since 1960 when it began keeping such records. Equipment dealers have reported that it is not unusual for farmers to pay off their five year notes in three or four years. That debt management skill and discipline could be a source of pride, as well. The agriculture industry is in strong shape because it learned its lessons from the 1980s, says Kevin Dhuyvetter, Ph.D., Extension Agricultural Economist, Farm Management at Kansas State University. Because of that, he expects the financial crisis afflicting the rest of the nation, and the world, to have less of a negative impact on farmers. Local and rural banks are in reasonably good financial shape, Dr. Dhuyvetter points out which may have accounted for the vociferous opposition from the Heartland to the bailout; and why both Kansas senators voted against the proposal. Large corporate farm and livestock operations, on the other hand, might be exposed to the same credit limitations facing big corporations in other areas of the economy. In some cases those big farms and ranches have outgrown the local banks, claims Dr. Dhuyvetter, and they will have to deal with the hazards and conditions imposed by the struggling banking giants. Illustrating such a situation, Lane Broadbent, an analyst at KIS Futures, says bankers have been reluctant to finance cattle in the last couple of years because of rising feed costs and weather conditions. However, Dr. Dhuyvetter has talked with relatively large cattle producers who have
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Agriculture:

LESSONS LEARNED

Whether farmers are experiencing higher costs or lower prices, Francl concludes the net impact is the same: less income. But still, he maintains, agriculture, especially at the

Crop Quest Perspectives

With the influx of new employees joining the Crop Quest Team, it is our mission to ensure every producer has a talented, dedicated and knowledgeable agronomist as a partner within their operation. Whether you have a seasoned veteran agronomist or one fresh out of college, you are receiving the quality service Crop Quest demands. By: Jim Gleason Regional Vice President Statistics from the Bureau of National Affairs shows that recent graduates averSt. John, Kan. age 18 months at one job. Additional statistics show that todays generation (Generation Y) will have over 10 jobs throughout their lifetime. Therefore, Crop Quest is committed to finding the right people who possess a passion for working in production agriculture and to engage these new employees so we can retain them as your agronomist for an extended period of time. Because Crop Quest is an employee-owned organization, our agronomists have a vested interest in the success of both our company and your operation. To ensure success on both sides, we provide a variety of on-boarding techniques. On-boarding is the new buzz word for orientation and training of employees to help them become engaged within the company. On-boarding begins with the interview process and continues throughout the first one to two years of employment. We want our new employee-owners to have the skills and knowledge to be successful in the field. Our new agronomists are not necessarily new to the business of consulting. Many have worked at least one summer as an intern with experienced agronomists who served as a mentor. During this internship period, they are learning the various facets of production agronomy. They have a chance to further develop their skills

Networking And Training Among Crop Quest Agronomists Provides Consistent Service To Producers

in identifying problems within the field as well as developing solutions to overcome them. All new hires work with a mentor agronomist who may or may not be their division manager. The mentoring process does not stop with the end of the crop season. It is an ongoing process that extends throughout several years. In addition to the important role mentors play in training a new employee, the mentor is also learning. The great thing about agriculture is that it is a dynamic industry constantly changing so our agronomists are constantly learning. During the winter months, Crop Quest employees spend a lot of time in meetings to learn about new advancements and products that are available to our customers. At these meetings, lots of ideas and information are shared between our staff, and a network of collaboration is established. It is this type of networking that is really one of Crop Quests greatest strengths and assets for both the employee and the producer. A customer may only know the agronomist that comes to their farm. But, that individual is backed by the experience and knowledge of the entire Crop Quest staff. It is pretty rare that someone within our team has not seen or been faced with a particular problem. By tapping into this network of expertise, we are able to deliver timely, pertinent advice to our clients. Crop Quests on-going, on-boarding and mentoring program in addition to the open communication and meetings with other industry partners (local co-ops, seed dealers, chemical companies, etc.) and our network of trained agronomists ensures producers that their agronomist is prepared to provide the most sound advice and recommendations possible. Our employee-owners will continue learning about the most recent technology and advancements in agriculture while applying this knowledge to help our producer customers with their 2009 farm plans.

CROP QUEST ADDS STAFF FOR TOUGH TIMES

With the U.S. and global financial institutions encountering a perfect economic storm of tight credit, investment bank failures and stock market panic, not to mention declining property values, the importance of agronomy specialists to the agriculture industry cant be overstated. Josh Wendland joined Crop Quests staff in the week of Wall Streets most precipitous drop since 1929 and its biggest single day recovery in history. Wendland sees his primary responsibility as helping crop producers become more efficient in the face of rising fertilizer
Josh Wendland
2 Crop Quest Perspectives www.cropquest.com

costs and declining futures prices. He will be responsible for Crop Quests activities in several Eastern Kansas counties including Washington, Marshall and Clay, and will be based in Greenleaf, where he most recently managed the agronomy department for United Farmers Coop. Wendland is a graduate of Fort Hays State with a degree in agricultural science and business. From his earlier experiences, he is familiar with the challenges producers in the area face and knows many of the farmers. I hope to grow the customer base for Crop Quest, says Wendland, and help farmers manage their business in this tough time.

Input Cost Critical To Profitability

Now that many of the input costs for the production of crops President have increased significantly and Member, National Alliance with the decline in commodity of Independent Crop Consultants, CPCC-I prices, it is more critical than ever to Certified consider the return on value for every input prior to planting the next crop. Most of the wheat has been planted; so many decisions have already been made for this crop. Since wheat is a high responder to topdress nitrogen and farmers are accustomed to split applying their nitrogen needs for this crop, the remaining nutrient decisions can be made during the late winter to early spring. This also helps to lower application costs, if both nitrogen and herbicides can be applied at the same time. Without proper soil testing, it is just a shot in the dark as to which soil nutrient is the most limiting in a given area. Soil testing also allows for determining the nitrate nitrogen carryover, which can be used for the next crop within the High Plains region. On some fields, this can be a tremendous cost savings where the carryover nitrogen is high from a previous over-application, reduced crop yield or a high nitrogen mineralization of the soil. Some areas across the country do not even test for carryover nitrogen due to the high leaching that occurs within
By: Ron OHanlon

their heavier rainfall areas, but here in the High Plains, it is an important nitrogen resource. Soil testing helps to determine which of the limiting nutrients has the greatest chance of giving back the greatest return. If soil pH is really low, it is important to correct this with liming, before the crops will respond to any of the nutrients for maximum value. The same goes for each of the individual nutrients themselves. Fertility is one of the first decisions that has to be made regarding crop production, but all of the crop inputs need to be evaluated during this next growing season to achieve maximum economic return. Be sure to visit with you Crop Quest agronomists regarding crop budgeting and other cropping input decisions.

Agriculture ... Continued from Page 1

only been moderately, if at all, affected by the crisis on Wall Street. He hasnt come across any cattle producers who have encountered major credit obstacles. But he also makes the disclaimer that he focuses his research and analysis on Kansas and does not project what he has found in the Sunflower State to necessarily hold in other states. Nevertheless, tight credit has found its way back to the farm, as the agribusiness sector of the economy dips downward slightly from its current all time high. When the futures markets that had propelled grains and cotton prices to record highs earlier in the year showed signs of decline in July, analysts couldnt determine the cause, according to Darin Newsome of DTN, until they began to realize the depth of the credit crunch. Francl believes there are a number of factors affecting farm income, but shrinking credit availability which is the leading cause of the current financial instability simply serves to exacerbate the already volatile input/output price situation. Carl Anderson, an agricultural economist at Texas A&M, backs up what Francl and Dr. Dhuyvetter say, indicating there is no immediate credit problem because agricultural lending institutions remain strong. But theres fear, he says, that the recent financial meltdown will make bankers far more cautious. He anticipates lenders will want more equity and collateral before approving loans to crop farmers and ranchers as well as beef, pork and chicken processing companies. for quick gains. There also remains the dangerous potential that the financial crisis could be deeper and more prolonged before the federal bailout of Wall Street shows any signs of improving the situation. A majority of economists are calling for things to get worse before they get better. Dr. Dhuyvetter suggests farmers and producers hedge their chances of survival by sticking to what has made the agriculture sector the only bright spot in the U.S. economy. Even with the futures market providing farmers with record incomes this year, it is not the time now, according to Dr. Dhuyvetter, to ease up on the management principles that have elevated the fortunes of many producers. If I am a producer, I need to be managing costs aggressively, he emphasizes. Terry Francl at the American Farm Bureau advises crop farmers to procure their inputs for 2009 carefully. He cautions about bidding in higher costs for the inputs since futures prices are trending downward. Using less fertilizer is an option for curtailing costs, and he suggests considering alternative seeds. It might also be the time to review and renegotiate land usage costs if you are renting or leasing property. If you are about to get an increase in the rent youre paying on a lease, he says, maybe you ought to decide whether or not it is worth farming it. These decisions farmers have to make are crucial, especially in light of the uncertainty of the domestic and global economies, and should not be taken lightly. Just as nutrient inputs are vital to the outcome of your crops, the input you get from qualified agronomists analyzing your particular situation, circumstances and plans is essential to the success of your business.

STICK TO THE BASICS

While many fabled speculators over the centuries have made fortunes during economic crises, Dr. Dhuyvetter isnt advising farmers and livestock producers to look for windows of opportunity

Crop Quest Perspectives

CROP QUEST Expands into

Northwest Kansas
Regional Vice President
Ulysses, Kan.

By: Dwight Koops

Late this summer, Crop Quest Inc. opened for business in Northwest Kansas. This is an area of the state where Crop Quest has been interested in servicing for many years. We had the opportunity to locate two experienced agronomists into the area, and are very excited about the future of the area. We would like to introduce you to the agronomists who will Grant Havel be servicing NW KS: Grant Havel has over 10 years experience with Crop Quest. Grant has worked in both SW and NE Kansas for our company. He has extensive experience in agronomy, Precision Agriculture, and Nutrient Management. He is a very able and competent consultant who builds complete trust with farmer/producers

from day one. Grant is now living in St. Francis, KS. You can reach Grant at 785-456-5729. Norman Kinderknecht worked for Crop Quest in the late 90s in Central, KS. He has been working as a farm management consultant the past few years. Normans experience in both agronomy and farm financing make him a very valuable asset to the producers in the area. Norman resides in Colby, KS. You can reach Norman at 785-443-3483. Norman Kinderknecht We are already seeing a tremendous response from producers. Farmers in the area are craving a quality consulting service that will always keep their best interest in mind. We believe we offer this service throughout our organization. Northwest Kansas will be no exception.

Crop Quest is an employee-owned company dedicated to providing the highest quality agricultural services for each customer. The quest of our network of professionals is to practice integrity and innovation to ensure our services are economically and environmentally sound.

Mission Statement

Crop Quest Agronomic Services, Inc. Main Office: Phone 620.225.2233 Fax 620.225.3199 Internet: www.cropquest.com cqoffice@cropquest.com

Employee-Owned & Customer Driven

PRSRT STD US POSTAGE PAID DODGE CITY KS PERMIT NO. 433

Crop Quest Board of Directors

President: Director: Director: Director: Director: Director: Ron OHanlon Jim Gleason Dwight Koops Cort Minor Chris McInteer Rob Benyshek