By Brian Hefty
Cost vs. Investment. We talk about it all the time, and it’s a hard thing to get past, but it’s an important step for a successful entrepreneur to take. If every time you substitute the word investment in place of the word cost, it changes everything, doesn’t it?
Here’s my point: I don’t care what I spend on the farm. What I care about is that each investment, no matter large or small, provides a good return for me. Yes, we all want to feel like we got a good deal or bought something for a low price. I’m not saying don’t do that. I’m just suggesting you analyze every cost in your business as an investment, and then evaluate it based on its return.
For example, since we told you Roundup hit its low price point in early September, all glyphosate products have now gone up 10 to 20 percent. There’s nothing you can do now if you didn’t get product bought at the low price. Glyphosate will probably continue going up another 10 to 20 percent by spring beyond where the price is today. However, does that mean glyphosate is a bad investment? I would be willing to bet on most farms, like ours, glyphosate should still provide a very positive return on investment, even at the price I expect it will be come spring.
Once you’ve established that something is a good investment, it’s just sound business to try to buy that product at a low price, inclusive of rebates, service, advice, etc. Before spring, we are expecting more than cost of money increases on the prices of all glyphosate products, soil insecticides, seed, Liberty, and a few conventional herbicides that are really good at stopping Roundup-resistant weeds. Buying now, or at least in December, should save you money and make your ROI even better.
Fertilizer is the wildcard this year. We fully expect P & K usage to be down dramatically due to the drought in most of the country, but I hate to predict anything, because fertilizer prices are just flat out volatile.
Since we still have high commodity prices, a good farm outlook for 2013, and several years of relatively high farm income, most companies want to increase farm input prices. Buying sooner rather than later on most items should be a good move.