Only a few weeks remain to make financial decisions in the current calendar year. A few minutes of planning now can save a bundle of money in 2017 and mean the difference between a profitable grove, orchard or vineyard and one that barely limps along.
Set aside a few hours tomorrow. The money you save with a little paperwork and planning today will let you enjoy a weekend in town.
“You might think you are done when you finish harvest, but you really can help those vines thrive in the spring,” said Michael Cook, Texas A&M AgriLife Extension viticulture program specialist in Denton, Texas. As one of four state specialists, he handles 55 counties in North Texas.
His advice for grape growers applies to any fruit grower. “Be sure your sprayer is drained and ready to go for next year,” he said. Next, evaluate the effectiveness of your spray program.
“Start to evaluate how your fungicides performed and how you plan to manage them next year,” Cook said.
Late fall and early winter is also a good time to do necessary machinery repairs. On trellised operations, it is the perfect time to do repairs on the trellis system and to do some minor training.
In addition, Cook said it is a good time to clean up the canopy floor. None of this should require writing checks for extraordinary expenses.
Expense reduction will be key to survival in 2017. “Cut expenses but be sure you’re cutting in the right place,” said Randy Reeves, Texas A&M AgriLife Extension service agent for agriculture and natural resources in Gregg County, Texas. He recommends cutting in areas that will not affect crop yields.
There is always that delicate balance with fertilizer applications. “Yes, fertilizer prices are high,” Reeves said. “But we still have too many people who fertilize at low rates. That savings is coming at a cost (in production).” An alternative to expensive fertilizer is chicken litter, which may be available regionally. In other parts of the country, dairy manure might be available to boost both fertility and organic content in the soil.
Manuring is another key for producers — even those without livestock. “Concentrate on adding organic matter whenever you can. Organic matter retains water — and you never know when you are going to need it,” Reeves said.
“My advice to farmers as we close out 2016 is going to be to manage your business more than you manage your taxes,” said Lloyd C. Pickell in Manheim, Pennsylvania. He does financial work for producers across Lancaster County and nearby areas.
Pickell, who grew up on an orchard, is in tune to what is happening in the fruit and vegetable crop arena.
Weather is a wild card in any producer’s game plan.
“The strawberry crop was not good in this area,” Pickell said. “The peach crop was poor.” The season started out with a cool, wet spring followed by a short warmup when the buds pushed. That hopeful start was followed by a late general frost, so it is little surprise that fruit growers in southern Pennsylvania into Maryland and northern Virginia got socked.
“As a child, growing up in the orchard business, I learned early that April frosts are not good,” Pickell said.
A lot of the other crops had spotty thunderstorms through the season. The result was a region where it either was too wet to do much good or too dry to do any good at all.
Cook pointed to 2016’s “horrendous rains” followed by drought as a challenge for any producer. Some were unable to spray. Others were unable to find materials. And vegetable crops did not look good.
“Cantaloupe producers are having their problems,” Pickell said. “In general, it is not going to be a good agricultural year.”
Even fruit and vegetable growers with some diversification into cattle or field crops are not going to find much relief.
Reeves said 2016 was a fairly benign year weather-wise. “We’re constantly trying to remind people about the weather,” he said, noting that 2016 was one of the driest, hottest years on record. “Don’t get complacent,” he warned.
Part of the challenge for 2017 is commodity prices. Another factor is the flat-out counterproductive spring weather. Conditions were cold and wet at planting. As spring wore into summer, rains were spotty, and fields that were planted did not look that good. In short, 2017 promises to be a short cropping year.
“Watch your expenses,” Pickell said. In addition to his accounting work, Pickell sits on the board of directors of a local bank. “When our customers get into trouble, it is usually debt-related,” he said.
To that point, he advises his clients not to buy expensive equipment. “Pay attention to your business and your situation,” he said.
“Maybe wait a year or two before you buy that new tractor or ATV,” Reeves added.
Pickell sees nothing new on the horizon in the way of tax laws. “It’s an election year,” he said. “Things are pretty well set.”
Politicians are more interested in stumping for votes at this time of year than they are in making adjustments to the Internal Revenue Code.
Pickell said he noticed a lot of farmers in many categories are having a difficult year. Dairy producers, in particular, are struggling after good years in 2013 and 2014. Beef, while coming back a bit from an awful first half, still needs tight management.
As the calendar year wraps up, beef producers are having a better time of it than they did in the first several months of 2016. Still, nobody is getting richer this fall on cattle more than they are on tree crops.
Some producers are viewing direct sales as a possible way to increase revenue from tree crops and vegetables.
Research from New York state shows there is a huge potential for growth. Cornell did a study in the Ithaca area and came up with shocking results. Although the college town is one of the most local-food-friendly places in America, only about 20 percent of the fruits and vegetables in the city comes from local farms. That means that 80 percent of the demand is going unfilled, said Matt LeRoux, agricultural marketing specialist with Cornell Extension in Tompkins County, New York.
This flies in the face of some direct marketers who report demand for local produce is flat or even declining. LeRoux disagreed, noting the number of new farm entrants into the market. “Much of that can be credited to the same pie being sliced into smaller slices,” he said. This comes as other producers see the benefit of pursuing direct marketing.
In addition to marketing, some horticultural practices can help get acreage off to a good start next year. Fall is always a good time for grape producers, either white or red, to build vine health. Cook likes to see an application of 10 to 20 pounds of actual nitrogen (N), depending on soil type.
The N will help boost a second flush of root growth after harvest, encouraging prefrost foliage growth that will produce energy that the vines can store. That energy will help them take off next year.
Conversely, Cook warned, growers do not want green growth freezing off in the early winter.
The major question producers should ponder is how to stay afloat until things change.
Manage cash flow
Pickell is a firm believer in debt reduction. “If you have debt, you have given yourself no flexibility,” he warned. “Either have a line of credit available (at a bank or Farm Credit) or have good cash reserves on hand.”
He is so focused on debt reduction that he will even advise clients to forego funding retirement programs in favor of debt reduction. Pickell believes that a producer can always catch up on retirement contributions down the road.
While it is not orthodox, he contends that an operation that is in a solid cash position is in a much better position to survive to retirement than one that is debt-ridden.
“Retirement funds are good,” he said. “But I am a firm believer that if you have debt, you need to deal with that first.
“The operations that survive bad times are the ones without a lot of debt,” Pickell said. Debt robs a farmer of flexibility. Having a line of credit or cash on hand bridges those times.
Pickell said he thinks the current squeeze is “one of those cyclical things,” adding that the weather this year did nothing to help the situation. In a couple more years, as weaker producers leave the business and demand firms, he sees a return to better times.
Whether we are in a short- or longterm economic cycle, producers should heed additional advice from Reeves: “Plant varieties that are recommended for your area,” he said.
He added, “Try to keep expenses down. Don’t get overextended.”
Pickell agreed. “I want my people to concentrate on managing their business. When the good times come back, you will be positioned to take advantage of them,” he said.