3 ways to make your farm more profitable

Rising input costs are putting more pressure on growers’ profits. With no relief in sight, it’s a challenge that’s forcing growers to think differently about how they run their operations. Darrin Unruh, an Indigo agronomist and cattle producer in south central Kansas shares his strategies for helping growers and their operations become more profitable. 

Unruh says the first thing you need to do to determine how you can increase profitability, is to determine your cost per bushel. “I would definitely start with that and then assess the whole life cycle. Indigo has some great tools that we can use that are available to you as a carbon grower to help assess those things. It takes everything into account and it’s free,” he said. Unruh is referring to Indigo’s Profitability Tool, a calculator that gives you an honest look at your operation’s profitability.

Unruh says the process of nailing down your cost per bushel will bring all your costs into the spotlight. “All of your inputs are going to build and get reflected in your bottom line. We've got to start taking a look at ways to reduce, or even eliminate some of these expenses that add up little-by-little,” said Unruh.  Unruh adds that you’ll also need to look at all of your costs with a fresh perspective. Practice changes like reducing tillage can help you control a cost that was previously considered a given.  Changes to tillage practices to reduce impact can save you, whether reducing by a pass or by switching to a lower disturbance implement. See your estimated savings.

Beyond your typical input costs, like chemistry, Unruh says you also need to factor in other costs like machinery, which includes machinery maintenance and even the extra money you’re paying for machinery when there’s inflation. “This inflation thing is real. It’s affecting everything: the tractors, tillage equipment, harvest equipment, everything,” said Unruh.  “I worry that growers are getting slammed from all sides,” he goes on to say. “It's not just the chemicals and fertilizers. It's also equipment. So we need to see if we can reduce costs as much as possible and even eliminate some through practice changes.”

Profitable farming goes beyond your balance sheet, Unruh says. It bleeds into other areas that are more difficult to quantify within your budget, like increased resiliency to environmental or supply chain pressures.

Decreasing your operation’s dependence on chemicals means supply chain issues won’t have as big of an impact on your crops. “It all goes directly to the farmer's bottom line if they continue down this high input path. I see a train wreck coming if we don't address some of these steps right now,” said Unruh.  Unruh says that the price hikes on nitrogen have a lot of growers worried. But, by incorporating cover crops into your operation, you’ll have more plant-available nitrogen for your cash crop and you can decrease your reliance on fertilizers. Find which cover crop blend has the most impact on available nitrogen for your cash crop. 

Unruh also warns that extreme weather events could have an extreme impact on your operation. He says the best ways to make your soils more resilient to these events are to incorporate cover crops and reduce tillage. By improving soil structure, you’ll improve water infiltration and be ready to  better handle both heavy rains and dry stretches. “We can drought-proof our farm by getting more organic matter and a healthier soil microbiome, which allows for better water infiltration and nutrient retention,” says Unruh. 

Cover crops and reduced tillage can also make your operation more resilient to pest, weed, and disease pressures as well. “We can eliminate a lot of pests with diversity over time. It's not going to happen overnight, but over time we can eliminate a lot of pest pressures with diversity. I know of some instances that just a 1% increase in organic matter reduced disease significantly,” says Unruh.  “If your soil's healthy, the diseases won't have as much of a foothold to grow. Some of those problems can be automatically eliminated,” he adds.

Unruh says the best way to increase profitability is to hone in on your soil’s health. Not only will it address the pest, weed, weather, and disease pressures, increasing soil health can help you avoid costly situations like compaction. Unruh says that local and national programs help support growers as they incorporate these new practices. “There are some great programs through the USDA to help us eliminate that cost. There are also a lot of local programs like local stewardship initiatives –whether it's through a watershed program or a municipality– that work to support their local environment,” says Unruh. “Once you can identify those, I know a lot of producers who are completely covering or eliminating the cost of the cover crop seed through utilizing these programs altogether,” he adds. Unurh recognizes that supply chain issues can also affect cover crop seeds because of weather events in specific regions. “However,” Unruh says, “I think the luxury we have with cover crops is we can do some substitutions. It doesn't have to be a certain species all the time. I would rather plant something than to plant nothing. Also, almost all cover crop seed is domestic and just doesn’t require manufacturing or other inputs that can hang up conventional inputs like fertilizer or herbicides.” 

Incorporating popular soil health practices like cover crops and reduced tillage are also practices that increase your potential to sequester carbon in your soils. That opens your operation up to the possibility of a new revenue stream- joining a carbon program like Carbon by Indigo, which pays growers for sequestering that carbon. Estimate how much you can earn by sequestering carbon through the Carbon by Indigo program, click the button below.

Unruh says growers who are interested in increasing profitability can see quick results. “You can start dropping inputs year one,” he says. But he also says that it’s ok to incorporate these changes slowly. “There's a learning curve to this, but you have to start somewhere. Take one field or start splitting a field or fields and try different practices to find out what's going to work and what's not going to work. You don't want to bet the whole farm, even on something that I'm so confident will make you more profit in the long run. Just start off and analyze it as you go. Splitting fields will help you really determine what's going to work or not work for your farm,” he said.  And while you do have to start somewhere, you don’t have to start alone. Indigo’s expert team of agronomists can help you develop a profitable farming plan that’s as unique as your operation. Chat with a carbon farming expert in your Carbon account.