This Labor Day, I took the opportunity to start harvesting one of the best corn crops we have ever been blessed with on our farm. The yield monitor on this 25-year-old machine consistently was north of 200 bushels per acre on non-irrigated West Tennessee soil. Wow. So, out came the phone and with a check of the local grain prices, I started figuring. My dad always told me 'figures don't lie, but liars frequently figure'. Well, I try not to fall in that category so we did the quick math of 200 times $4, which equals 800 bucks per acre.
Wait a minute, we have over $800 per acre in fixed and variable cost — fertilizer, seed, chemicals, spraying, fuel. etc., — hard dollars we wrote checks for. My brother, retired Dr. Brannon, and I farm together, and we are on his land now, so we have to write him a rent check of one fourth. Hmmm, that is $200 per acre. Wait, we are only getting $800 per acre and THAT was below cost! So am I lying to myself or do my figures tell me we are losing well over $200 per acre on a record yielding year?
I am not a liar — the figures are correct. Now multiply that times 250 acres and one gets a total cash loss of over $50,000 for a year’s work — all on a bumper crop. Then I thought of some of my customers. One farms 4,000 acres. I know his cost per acre is more than ours, so figuring in my head while watching a deer at the end of the field enjoying an ear of corn I missed, I came up with just under a million dollar loss! From euphoria to downright depression I started lying to myself (Dad was right).
Well, it is not that bad, we lost on wheat, but insurance brought it up to break even. Maybe we selected the correct crop insurance, and it would help in getting this super corn crop to
prevent a loss so we could do it all over again next year. Something is definitely wrong here. It reminds me of the time sitting with our past Gehl rep, George Dudenhoeffer, and telling him something about a “stupid farmer.” He smiled and opened up a newspaper clipping that showed that production ag farmers are less than 2% of the population. He said, “Now Tim, you just called your customer stupid, do you realize you CHOSE a profession of selling high dollar specialized equipment that only 1% of the population can or needs to purchase? You want to rethink who is ‘stupid?’”
Well, I figured some more and realized my pity party is self-inflicted. Nowhere in the capitalistic system does hard work guarantee a profit all the time.
We are subject to the law of supply and demand with a measure of international politics/subsidies and currency manipulation that make the equation unsolvable at times. Countries like China, which really do not like us, can be our best friend or worst enemy in the variables of the equation. One has the tendency to say, hey, the government ought to do something about this. Past experience teaches Ronald Reagan’s quote, “I’m from the government and I am here to help” are the scariest words in the English language. So, what do we do?
Just as in our dealership, which is experiencing a slowdown in machinery sales as well, we learn from the past. Keep expenses as low as possible, pinch every penny as if it was worth something, watch our inventory the best we can, realize cashflow is more important than profit at times, offer deals to help customers rationalize that their purchases are a good investment in these times, keep the chin up and attitude adjusted to realize better days are ahead.
King Solomon, supposedly the smartest, wisest man in the Bible, said he tried to find fulfillment in wine, women (sorry about that ladies — it is in the Bible), knowledge, wisdom and on and on, but the thing that won out was simply doing his job and doing it well. It is good to be a king, farmer and equipment dealer. So, this should be our goal, live each day and enjoy it, always be looking forward and “figuring” out a better tomorrow. ‘Til next time wishing you miles of smiles and profits.
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Told from the perspective of an in-the-trenches owner/operator — Tim Brannon of B&G Equipment, Paris, Tenn. — Equipment Dealer Tips, Tales & Takeaways shares knowledge, experiences and tips/lessons with fellow rural equipment dealerships throughout North America. Covering all aspects required of an equipment dealership general manager, Brannon will inform, entertain and provide a teachable moment for current — and future — leaders within equipment dealerships. |
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