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Jeana Harms is a CFO at Clete Inc., a family row crop and cattle operation in Gering, Nebraska. She has been a Granular customer since June 2015. We caught up with her recently to understand how she makes input inventory management decisions throughout the season.

Tell us about yourself and your farm.
Clete is a diversified farming and cattle operation. We farm corn, sugar beets, wheat, dry edible beans, and alfalfa, mostly under irrigation. We run a cow/calf herd as well, and operate three feedlots. My background is in finance, actually. I got a degree in Accounting and then worked as a loan officer at Farm Credit. That’s where I met Mike, my fiance, who runs the farm. My role officially is CFO but I take care of all of our data management – more than just the financials. I don’t decide what seed goes where, but I give the guys the data to help them make the decision.
Describe your process for planning what inputs you’ll need each growing season.
The five of us (the two farm owners, our agronomist, our ops manager and myself) sit together to figure it out. We used to decide how many acres of each crop we were growing where, and then manually estimate what inputs we would need. Now we use software to develop our crop plans, and it gives us a quick total of each product we’ll need the upcoming year.
What strategies or practices do you rely on to make sure you’re getting the best prices?
Based on our volume, we will check with a few different suppliers to compare prices. We do almost everything locally – we get good prices locally. We don’t switch for pennies, though. The relationship we have right now is important – we rely heavily on customer service and really value the ability to get our products right when we need them. Waiting a day is a big deal, so the delivery is important. We’ll probably get our own tanks soon so that we can do it on our own.
How do you keep track of your input inventory throughout the season?
We have software that keep track of this for us. As we complete our field tasks and put in our deliveries, we can easily access what our inventory to know what we have and what it should be. Since we get fertilizer delivered to the fields directly, we know how much was applied where and when. Everyone puts it on their mobile app and then I can see it on my side on my desktop.
We used Excel before. And we had to trust our suppliers a lot more and had to rely on a text message or a phone call. Now I’m much better at catching errors because I have an app I can hold everyone accountable to. When they don’t do it, I get on ‘em.
How do you manage unexpected changes in plans or field activity?
It depends on whether the operator is in the field already. If we know about it before the operator is in the field, we will change the task in our software so that his work order is correct when it shows up on his mobile phone. If, for instance, our spraying operator is in the field already and he needs to use a different chemical, he will change this on the phone app and then apply it.
Three days ago we changed a few fields from corn to beans. I can manage these from the computer, on my side, but then the guys see it when they’re out. And if they change what they’re doing and then enter it in the app, I see it on my computer when they hit “Complete” on the work order.
What advice would you give other farms to improve their inventory management?
Obviously for me, the most important is technology. But even with the technology, communication is key. Getting employees on board, and explaining to them why we’re doing what we’re doing. I have meetings with them to explain the importance of our data. They buy into that and they realize that this is their job, and that they can make a difference on whether the company makes money or not. Having the employee care about it. That’s helped us the most. Doesn’t matter what systems you have in place if the team doesn’t believe they can help everyone.
How has Granular’s farm management software caused you to think differently about your business overall?
We now utilize Granular to keep track of all of this for us. As we complete our tasks and input our deliveries, we can easily access what our inventory should be. It’s made it clear that we can’t really rely on our memory. We’re all so busy, and we all think “oh well, I’ll write it down later.” There’s a high chance that you’re not writing the right thing.

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With farmers facing some of the most drastic swings in profitability in recent history and no changes to crop prices in sight, one of the key questions of 2016 is: how long will it take for production costs to correct? Historically, it takes about 5 years for input prices to adjust to changes in crop prices, with seed and fertilizer prices typically moving sooner than other expenses. Recent data indicates that 2015 experienced the second largest decline in farm input prices on record (including seed, chemical, fertilizer, fuel, machinery, labor and rent). Most signs this year continue to suggest that 2016 will be unprofitable for many farmers, barring any huge, unexpected decreases in input prices. Still, not all is lost.

To estimate input costs changes for 2016, the FarmDoc Daily team analyzed recent fertilizer prices using the “Illinois Production Costs Report” and concluded that total fertilizer costs for corn would likely drop in 2016 by about 8.3 percent compared to 2015, using December prices. Granular decided to run its own trend analysis using data from current customers from across more than 35 states, and compared individual product prices paid for seed, chemical and fertilizer in 2015 to prices paid in 2016. For example, Granular found the price of Roundup PowerMAX dropped by 12 percent on average over this time period.
Across all farm inputs, chemical and fertilizer costs decreased the most from 2015. The average chemical price saw a decrease of 9 percent, and the average fertilizer price has dropped by 8 percent – in line with the FarmDoc data. Seed costs on individual varieties have not changed significantly. Granular compared the same products from year to year, so this analysis would not account for the effects of growers switching to more economical seed varieties.
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What does this data mean to the farmer? Given current University of Illinois crop budgets for seed, chemical and fertilizer costs, the net effect of the price changes we see for the average Granular customer is more than $17 per acre. With crop budgets anticipated to be largely negative for the year, $17 per acre can make a significant difference on a farm’s profitability. The farmers that can effectively negotiate with their suppliers will clearly have a valuable advantage in 2016.

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