Rudolphi's Burning: Prepping

Rudolphi's Burning on

News From The Coffee Shop

March 20, 2013 9:39 PM

Prepping

I am going to make reference to two very different areas throughout this month’s article.  Doomsday Preppers and college basketball…try to follow along.

I am sure that most of you have seen or heard about the television show Doomsday Preppers.  If not, the program showcases people and families that have put extensive thought and planning as to their fate should a disaster strike.  Often times they hoard several thousand dollars of imperishable food, weapons, and ammunition.  These reserves are built to nourish their families and protect themselves from the thieving hoards that will undoubtedly be trying to steal their magic bag.

 While watching this TV show two themes quickly become apparent;

1.)    These people are bat shit crazy—(Yes, that is a technical term)

2.)    The showcased people are not taking a “Heaven forbid anything should happen” attitude.  In most cases, they seem hopeful that disaster will strike so that they can have the last laugh and ultimately tell the rest of the world “I told you so.”

My intent is not to discount preparedness, I do believe it is a good idea to have fire escape routes planned, first aid kits readily available, emergency contact numbers posted, and I am a proud gun owner.  However, I do not believe it is necessary to have more rice and pinto beans stored in your basement than is consumed annually in Latin America.

In production agriculture today, there seems to be quite a bit of “Prepperesque” lingo and articles making headlines.  Articles warn that $4 corn is looming on the horizon, consultants are advising producers to protect their downside risk, to prepare for the downturn, to buddy up to their Ag lenders, and to bulletproof their balance sheets.

But really….How bad is it going to get?  How bad can it get?

If we are forced to make sales in the $3-$4 level this marketing year it can only mean one thing….We have a big bunch of corn to sell.  By my arithmetic 225 bushels x $4.00 is still grossing $900/acre.  With inputs lurking in the $800/acre range-depending on land cost, this nets a $100/acre profit.  While it’s a long way from a homerun, the ink is still black.  On top of that, what $4 corn really does well is reignite the enthusiasm of our customers.  Feeders, processors, and importing countries will be much more enthused about our product if they can afford it.  We could actually spark some demand.

So why all the rhetoric about doom and gloom? 

First of all, consultants, advisors, and risk managers are more needed by their customers in times of financial duress than in times of windfall profits, so they are writing articles to spotlight the negative possibilities in hopes of drumming up more chances to prove themselves and their services to the industry.

Secondly, it is simple human nature to want to be right.  As in the Preppers case, they would rather be right than have their neighborhood and families remain safe.  For the consultants, they would rather be right having covered modest profits for their clients amid industry losses, rather than have the entire industry making lots of money rendering their precautionary advice worthless. 

Think about it, if you have ever put on a hedge and shorted the market, haven’t you secretly (or not so secretly) rooted for the market to go down, allowing the trade to go deeper in the money?  I sure as hell have.  Even when I’ve had cash grain left on the table to sell.  Nobody likes their decisions and actions to be proven wrong or unnecessary. 

But what if they’re right?

No doubt, the growing consensus is that we will see a retracement in the Ag economy of some sort.  If Mother Nature cooperates with us and we raise any type of a respectable crop at all, prices are probably going down.  So what will we do to protect our incomes and continue growing our businesses?

In the upcoming weeks, college basketball teams will be competing in the NCAA tournament to vie for the national championship.  The tournament will get crazy, it always does.  Top seeded teams will be eliminated, some teams will barely escape with slim margins of victory, and there will be a Cinderella story come out of nowhere.  At the end of the tournament, it really won’t matter how they got there, how narrow the margins were, or what officials made what calls, at the end of tournament all that is going to matter is who is cutting down the nets.

Think of the upcoming year and challenges in the same context as the NCAA basketball tournament.  Every operation and business has obligations to meet, goals they would like to attain, and a general timeline in which they would like to (or have to) achieve this.  It doesn’t really matter how they achieve this or what they do to get there, as long as it gets done.

To me, that is the real beauty of what goes on out here on the acres.  We find ways to make stuff happen and get stuff done.  Granted, we are always looking for ways to improve, expand, and invest in assets that make our businesses greater and out lives more enjoyable.  But when it comes down to it, there isn’t anyone in the business of farming that has forgotten how to roll up their sleeves, grit their teeth and “just make it work”.  If they have, they could probably use a career change anyway.

My advice, fill out a News from the Coffee Shop Bracket, enjoy the NCAA tournament, and take a little time to think about what might and could happen—both best case and worst case scenario in the upcoming crop year.  If you can find peace of mind somewhere in the middle of that range, relax, get the crop in the ground, and leave the dried food on the shelf at the store.

GO CYCLONES!

Editor's Note:

Rob Rudolphi resides in Eastern Iowa with his lovely wife Tara, where he is involved in several agricultural businesses. They currently have no kids, no dogs, and certainly no cats, and are generally up for anything involving a good time!

The mission of the column is to advocate agriculture, entertain (provided that you are entertainable), serve as a catalyst for critical thinking, and challenge the status quo amongst the agricultural community.

If you have a idea that would make a good "Burn Topic" for next month's Rudolphi's Burning column, please email the idea to prburmeister@gmail.com All entries will remain anonymous.