Will blending corn give farmer a better return?
The 2009 corn crop was really poor quality; 2010 crop was really good. With lots of weather issues it looks like the 2011 crop will have quality issues as well. I still have 10,000 bushels of top-quality 2010 corn. How can I blend that with the new crop to maximize my return?
Duffy: There really isn’t a standard answer to this question. It depends on the quality of the different corn you blend. The general idea is you take the weight on one batch times the average quality and then add that to the weight of the next batch times the average quality and so on until you have the entire blend you need. The final amount will be the desired weight you are mixing to achieve. Again the most profitable amount would depend on the different quality of loads you were blending.
Gassett: Three ways that growers attempt to blend grain is to layer it in a truck, auger two different grain qualities into a truck simultaneously, or run the lower-quality grain into a bin of higher-quality grain while unloading the bin. Although some growers may have had success with these methods, the University of Nebraska has a good bulletin titled, “Blending Grain and Feedstuffs — How to Figure the Proper Proportions.” The bulletin offers a formula to determine the proper proportions of each quality of grain, and says proper blending can be accomplished in a grain bin containing a stirring system, in a recirculating feed mixer or a recirculating feed wagon.
Swanson: Blending grain is more of an art than an exact science, which probably takes some experience to hit the target grade. It also depends on which quality criteria you are blending for such as moisture, broken corn/foreign material, or damage. In addition, you will need to know the grain sample analysis of each crop year. While blending for one of these may not be that difficult, the more factors you add to the mix, the more complicated it becomes. You will need the ability to draw grain from each segregated crop year that goes to a common conveyor and monitor the resulting grade. The rate at which you draw from each source will be the tricky part to get the desired final blend.
Many cash rents remain open
My landlord and I have agreed that I will farm his land in 2012, but we’ll set the cash rental rate later, sometime before March 1. I agree the 2011 rent was too low. Should I give the owner a bonus on the 2011 crop to improve my negotiating position for a “reasonable” rent hike for 2012?
Edwards: Providing a bonus for 2011 will improve relations and make it easy to ask for a downward adjustment later should prices and/or yields plummet. How large the bonus is will depend on how your current rent looks relative to rates that were set in 2011. Once you know the size of this year’s crop and prices during harvest, you should be able to come up with a reasonable value. Then you can discuss next year.
Gassett: Many tenants have had success being proactive and giving a bonus to the landlord in good years. It can demonstrate to the landlord that the tenant will be fair now and in the future, and that the landlord does not have to negotiate a high rent to be sure to get a fair rent. It may be good to propose a base rent and bonus plan for the 2012 crop year and calculate the bonus for 2011 based on the proposal to demonstrate how it would work and that the tenant is serious about renting the farm at a fair rent.
Swanson: A bonus for 2011 rent would be a gesture in good faith, which indicates to the landlord that you are willing to compromise for the low rent in order to remain in good standing with him. More and more cash rent leases are being negotiated closer to March 1, thus allowing for a better assessment of the potential crop production and market conditions. Hopefully, this would allow both of you to reach a “reasonable rent” for 2012. There are a number of variable cash rent leases being developed currently. FarmDoc at the University of Illinois has one that specifically includes a bonus feature as a permanent clause in the lease. You and your landlord may want to review it for items to use in your negotiations. It can be found at www.farmdoc.illinois.edu .
Iowa State University has information on flexible cash farm lease agreements (a publication and spreadsheet on its Ag Decision Maker site at www.extension.
iastate.edu/agdm/wholefarm/html/c2-21.html). Information and examples of flex leases are at www.extension.iastate.edu/polk/news/
This article published in the November, 2011 edition of WALLACES FARMER.
All rights reserved. Copyright Farm Progress Cos. 2011.