“We are no longer growing stuff,” while this phrase does not look that profound here in black and white, when yelled by Purdue ag Economist Mike Boehlje during the annual Purdue Agriculture Forum, it seemed very profound to the several hundred farmers in attendance. It came at the end of an hour long presentation, in which most of them had been challenged to think about their industry, their farms, and themselves in ways they had never done before. With the kind of candor that economists often use, born of facts and logical arguments, Boehlje layout the factors that are changing agriculture today and that will change agriculture tomorrow.<br>

“We are no longer growing stuff,” Boehlje yelled. “That is agriculture of the past. Today we are biologically manufacturing specific attributed raw materials for particular end use markets.”
Don’t you just love the way economists talk. Well, it is still easier to say we are “farming.” Yet, Boehlje has hit upon a key factor in agriculture today, things are changing and some of the old ways don’t work anymore. Just listen to one of my market reports on the radio and you will get an idea on how things have changed. Many of the analysts I have worked with for years admit the old rules are not working in today’s marketplace.<br>

Boehlje urged his audience to adopt new standard operating procedures (SOPs). He gave the example of two farmers who share a combine. One farms in Montana and the other in Illinois. The Montana farmer uses the combine in the summer to harvest his winter wheat and then ships it to Illinois where that farmer uses it to combine his corn and soybeans. Now that is certainly a new SOP.
“Come on, let’s get more creative,” Boehlje chided his audience. He said the profitable asset utilization is one of the largest problems facing farming today.<br>

When motivated, farmers can be very quick adopters of new technology and more than willing to change SOPs. Just look at how quickly triple stack hybrids have caught on in the Midwest. Roundup-Ready soybeans gained acceptance in just a few years. Boehlje urged his listeners to not be early adopters but “fast followers.” And things are certainly moving fast. The corn ethanol industry that hardly existed a few years ago will max out at 15 billion gallons of annual production in just the next few years, according to Boehlje.<br>

One of the biggest challenges facing farmers in the near future is “margin compression.” Even with high input costs, high land prices, and high rents, growers are still enjoying wide profit margins, but that may change, according to Boehlje. He recommended producers lock in those margins while they have them. He advised building some “cost flexibility” into your operation so you can adjust when volatile price movement hits. <br>

Finally he recommended something you hear more often from your wife than from an economist. He urged growers to save, “If you assume times are going to be good for a while, then you have to assume they will eventually turn bad.” He does not recommend farmers take the record profits they have now and expand their operation, buy new equipment, or more land.  He suggests building a reserve for a very uncertain future.<br>

So next time when someone asks you what you do for a living, tell them you biologically manufacture specific attributed raw materials for particular end use markets. And when they ask what’s new, tell them your SOP.<br>

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Gary Truitt may write to him in care of this publication.