THE BREAKEVEN POINT

THE BREAKEVEN POINT

This winter there was much producer angst as to whether or not 2009 would be a profitable year. Commodity prices tumbled hard, with some feeling no bottom would be in sight. Fortunately, the sideways market has offered some prices that are at a profitable point for many.

In the Women in Ag discussion group, some of you have commented on knowing what the true breakeven is for your crop. You are right to want to know the specifics of input and production costs, as even the smallest details can add or take away pennies or dollars from your bottom line.

Actually, the market does not care what your breakeven is. First of all, until you know your yield, there is no way to accurately calculate an exact breakeven per bushel or per acre. Selling at a reasonable margin can be a good idea, but you must have a buyback strategy in place if prices go substantially higher. And, in years of massive supplies, the market may never approach your breakeven. Holding out for that elusive breakeven number could position you to end up with bins full of grain at the absolute worst price levels.

So, instead of breakevens, think about maximizing any opportunity the market gives you. You deserve to get $5.00 corn when you can get it, because there will be times when you will have to suffer through $2.00 corn. What if your breakeven price on corn was $3.90 per bushel and the best price the whole year was $3.80? Isn't it smarter to sell most of your crop at $3.80, rather than wait for a price above your breakeven?

Farming is a tough business. You need all the money the market will give. Knowing your breakeven area can be helpful for many reasons, but do not base your marketing upon it. Instead, put your energy into understanding marketing strategies that will allow you to take advantage of every opportunity -- everything the market will give you.