One of the most difficult decisions farmers, like all business owners, face each new year is: how much should I invest in my business over the next twelve months? Is this a year to be cautious or even super cautious, or is this a year when investing a little more will help make up valuable ground? Investing in your business at the right time can mean achieving those life-altering, big-win years; knowing when to save is critical when your primary goal is just to survive. What does 2023 look like for you?
Here’s what I see ahead:
Fertility costs look to remain high with some softening compared to 2022. Fuel costs will continue to be high. Labour costs will continue to climb. With this cost outlook, increasing farm business profitability will be challenging but critical.
I have a close friend who farms in south-central Saskatchewan. He’s the type of guy who prefers to avoid risk: he typically plays the certain bets and prioritizes building a legacy he can pass on to his kids. He’s also committed to being a good steward of the land. For many years, he worked his way through an intensive cost-benefit process each winter to decide how much certified versus saved seed he’d plant the next year. About six years ago, he started realizing the trends he was seeing – that certified seed fields not only out-performed but out-profited his saved seed fields – weren’t ‘one-offs’ or chance. Using saved seed for a single year showed an obvious drop in returns; using it for two or more years produced a considerable drop in performance.
My friend’s ‘epiphany moment’ happened when he listened to an agronomist explain that seed produced from a parent plant is as genetically different as one’s own child is from oneself. He’d never thought about it quite like that before. In response, he went home, pulled out a seed catalogue, and placed a bigger-than-ever seed order. He hasn’t looked back since.
Investing in new varieties means his acres are ‘refreshed’ with the best possible genetics each year, and he can build in improved traceability (and marketability) into his business too. Especially this year given global food shortages, supply chain issues and dramatically increased demand, he feels now is an important time to look at all avenues to increase success and profitability potential.
Last week, he told me he’d sat with a couple farmer buddies over beers and he’d told them using certified seed on his farm is one of the easiest and most obvious keys to his success. I got a sheepish call from one of those buddies today: he’d told me a couple weeks back that he was going to use saved seed, but the chat with our mutual friend had changed his mind so he wanted to place his order. I get it: it’s hard to spend money when dollars are tight. But, I’m confident he’ll be glad he did come pay-day next year. How about you?