By Darren Hefty

2016 is starting off as predicted.  While most farmers are looking to trim expenses, most retailers are recommending they stay the course.  Cuts will certainly be made, but the real key to being successful is not to cut the things that are making you money.

The focus is squarely on the biggest expenses: cash rent, fertilizer, and depending on the crop it may be the seed investment as well.  However, in an effort to improve the bottom line everything is being analyzed.  Here’s a quick analysis on a relatively small investment – the seed treatment.

Return on Investment

ROI is a simple concept.  How much do you invest?  How much do you get in return?  Let’s say a seed treatment costs $5/acre.  If you get $10 back in yield, your return is 2 to 1.  That’s what I look for with any crop input investment.  If I can get a 2 to 1 return, I’m buying.  If I can get a 3 to 1 return, it’s a total no-brainer for me to use it.  The challenge with seed treatments is that the ROI varies from one year to the next.  In that case, you need to look at an average over a period of years.

Complete seed treatments often have three components (depending on the crop):

  1. Fungicide – The ROI varies depending on the crop, the severity of disease pressure, crop rotation, moisture and drainage conditions, and more.  Fungicide is rarely cut from the seed treatment program due to the low cost, the risk of injury to expensive seed,  as well as a strong track record of positive return on investment.
  2. Insecticide – The ROI here varies primarily on previous history of the field and crop rotation.  Where there is a strong three or more crop rotation and low insect pressure, this is the component farmers may choose to cut.
  3. Biological/Natural – There are many products in this category, including inoculant for legume crops, biological fungicides, natural nematicides, and nutrient uptake enhancers.  When you consider the high demand for nitrogen in legume crops, inoculant is rarely a good item to cut.  Proven natural products like QuickRoots are priced at a strong value proposition for you.  Other new or experimental products may not be, so you need to look closely at the data when making your decisions.

Last summer, Brian and I competed against 12 of the top farmers on the continent to see who could raise the best corn, soybeans, and wheat on our farm.  One key theme we heard over and over again from nearly every competitor is, “You just can’t afford to get your crop off to a poor start!”  2016 is a year to watch expenses on the farm.  It’s also a year to make smart investments that bring in more bushels, effectively lowering your cost per bushel.  Consider the ROI on each component of your seed treatment program to maximize profitability on your farm, not just lower expenses.