High-stakes decisions: when to buy crop inputs for next year

by

There are many input decisions to be made at any given time on the farm. Some of those decisions have to be made in-crop, such as for crop protection, while others happen well-ahead of the growing season, like those on fertilizer and seed.

Based on supply chain issues, major price increases, and potential product shortages, farmers are being squeezed to make a number key decisions within what feels like a shorter amount of time than a more typical year. Worse yet, there are still many variables still unknown on where prices are headed, which products may be tough to get, and what the full risk is in waiting.

From a management perspective, decisions on crop rotation, varieties, fertilizer amounts, and herbicides must be made eventually, but do they have to happen now in entirety? Maybe not.

All decisions are not created equal and must be weighed against the consequences of not making a decision, or the ramifications of a decision made today being wrong in hindsight.

The wrong decision on fertilizer is different, for example, than booking a possibly short canola or corn hybrid and being wrong. Bagged seed can be returned or exchanged (and might be in high demand come spring), while that fertilizer is yours to keep at whatever price you paid.

Actual availability is an added concern for fertilizer, too. Farmers gambling on lower prices in early 2022 may be correct, but there are significant supply chain concerns regarding production capacity and availability in the coming months, and prices don’t usually drop when supplies are tight.

If you choose to delay purchases, it becomes very critical to have a Plan B or C in case inaction works against you.

For example, if you choose not to buy fertilizer today and gamble on lower prices in the spring, will you just buy it at potentially higher price or will you switch to a different crop type to accommodate lower fertilizer levels? That will take planning, too.

It’s also possible that you are an all-or-nothing person. Some farmers will decide that all this shortage-this and shortage-that is just noise and it will pay to hold off on all decisions until spring. Others may view all of this information to be a signal to act and will consequently want full peace of mind and have all decisions and commitments made as soon as possible, even if it requires locking in lower margins.

With so many variables impacting growers’ decisions for the 2022 season, managing this risk and pressure will take real planning, estimation, and taking calculated risks. It’s not an enviable position by any means.

Related:

Please register to read and comment.

 

Register for a RealAgriculture account to manage your Shortcut menu instead of the default.

Register