How Do You Navigate a Down Ag Economy? | The Granary

00:00:00 There's no secret. We're in a tough agricultural economy, and we might be here for a while. 00:00:03 So, you know, I decided to do in this episode of The Greenery, bring in some, uh, buddies from extreme Ag and Galen beer from Aquid who obviously have been 00:00:10 through a couple of tough times in agriculture and cycles. And I wanna talk to you now about the agricultural economy 00:00:16 and how to best navigate it. Tips you can use in your farming operation in this episode of The Gravery. 00:00:21 You ready for a conversation with some real farmers about real issues? And the best part, you are invited. 00:00:27 Pour yourself a drink, grab a snack. Most importantly, pull up a chair. Welcome to the Grainery. Hey guys, 00:00:43 All guys, you just got the topic. And for anybody watching this, that's Kevin Matthews and one of the founders of Extreme Ag joined by Matt Miles, 00:00:50 one of the founders of Extreme Ag. And our buddy Galen Beer here with Agro Liquid. Agro Liquid is sponsoring this episode, the Grain Rea. 00:00:55 They have sponsored a number of episodes of The Grain. We're very happy to have you on here. And it's not just that you're a corporate guy, 00:01:02 you also farm in Oklahoma. It's some very tough conditions. You now only have tough conditions. 00:01:05 You got tough economy, and you also have been through a couple of storms because of your age, as have, uh, Matt and Kevin. 00:01:12 And even me, it's not as bad as the eighties. That's what I've been telling everybody. It's not as bad as the eighties. 00:01:18 That's usually like saying it could have been worse. You could have gotten a broken neck. I mean, it's, it's kind of tough. 00:01:22 So what are you, what are you telling people right now? Well, I mean the, the one thing that I'm just making sure guys are doing is, you know, 00:01:29 putting a pen to the paper. A lot of farmers, if you ask 'em what the break even is, they don't know. 00:01:35 And it's not uncommon, uh, in this type of economy. I've heard guys go nuts and pencils. I'm not planting anything. 00:01:41 And they forget about all those looming fixed costs that are out there. And so I think that, you know, 00:01:46 more than anything is guys need to really work through a process. How, how much is my actual herbicide program? 00:01:52 What do I spend on fertilizer? And make sure that they're evaluating all of those things for the year because it is tight enough. 00:02:00 It's not the type of year you wanna go wing it. I find it interesting that it's been more than 30 years, that maybe even going back to Purdue, 00:02:09 when I had someone talk about in an economics class, you really need to understand your cost of production. How is it that 30 to 40 years later, 00:02:16 we still have people out here running around that don't know. I get it. If there's an emergency that comes up. 00:02:21 Do you know your cost of production? Surely to goodness, Absolutely. Down to the nickel. 00:02:25 Pretty Much. Penny to the penny. Pretty much Penny. Which, you know, one of my goals early on was I always wanted 00:02:32 to have a CPA in-house. And so I accomplished that several years ago. Started out with A CFO that was A-A-C-P-A. 00:02:41 And then I found out, uh, his recommendation, I really needed a controller more so than a Chief financial officer. 00:02:47 And the controller does exactly as it says, she's a CPA, but she keeps everything in control. 00:02:52 Inventory's big, um, good example. Just in our filters alone, what do you think it costs just to service our equipment for one year? 00:03:01 Just filters? No, all. No, all now just the filters. I thought you were asking the question, Damian, but it's $29,000. 00:03:10 And by the way, there's A lot of people, and when you look at this and Wouldn't, they wouldn't build that into the cost 00:03:14 of production. They wouldn't even know. They wouldn't even, it's just Incidental. Yeah. But when you, 00:03:17 you know, you look at the shelf when our shop and you're like, wow, there's $29,000 sitting there on them on four shelves. 00:03:25 Yeah. You know, you know, four sections of shelves. Yeah. That's quite a bit. But just to service the combine 00:03:32 with the oil, oil and filters. No labor. $1,722. You need to know these things. Yeah. And you know, by knowing them, you know, 00:03:42 sa you know, I'm like anyone else. I, you know, I've got bills I owe, I make payments, have to borrow money. 00:03:47 That's the way it goes. And, um, my goal is to pay no interest. I had a loan officer that still works with me to this day, 00:03:54 and the first time we met in our conference room, he says, uh, I wanna work with y'all. 00:03:58 But said, I got one goal for you. He said, I want you to pay no interest and think about that. That's interest is a big deal. 00:04:05 Especially you talked about the eighties. I remember dad and him sitting there facing 18% to 20% interest rates. Yeah. 00:04:12 So cost of production doesn't just mean, okay, I spent this much on seed. And that's where I think maybe there might be some people 00:04:19 that make that fundamental error. Filters are part of cost of production. Right? Yeah. And that's what, even, even a lot of farmers that, 00:04:27 that you ask 'em, they know their cost of production, they'll tell you Yes. But they may not be counting their cell phones, 00:04:32 their their truck insurance, their filter. I mean, when you go to look at things and I was 12 in 1980. Okay. So I, I can't, I didn't experience that. 00:04:41 I don't know that it was any worse. Yeah, because what you just said about the filters, those, some filters in 1980 was probably, we 00:04:48 Probably 200 bucks. Yeah. Yeah. And so you're looking at 17,000 versus 200, you know, you're looking at 6% interest. 00:04:55 Now, I, I'm not a hundred percent at when interest was two, 3% I wanted interest. 00:05:01 Oh lord. You know, I want it because, you know, you could, instead of just paying your land off, you get twice 00:05:05 as many acres at 3%. Mm-hmm. You know, so there's times when interest is good. Mm-hmm. But what's happened 00:05:10 to us in the last couple years is that is an increase in cost. Mm-hmm. A downturn in the markets. Mm-hmm. 00:05:16 And an increase in interest. Mm-hmm. And so we got hit with three things at one, at one time. Yeah. So it, and one of the best things that's helped me 00:05:23 with that is almost going out of farming in 2000, I pretty much thought I was done. The, the bank told me I was done. 00:05:30 I went and was able to go to FHA and I, I think they had my clothes hangers on. I I'm Up and put everything, 00:05:39 My guns. Yeah. How much your household, when you Plumbers on your, on your inventory ballot sheet. It it is, if you, you're getting close, 00:05:46 you, you, you're getting close to The end close 25 years ago. But that between that 00:05:51 and working, uh, uh, two years at a bank as an ag loan officer Yeah. Those two things there 00:05:56 especially about to go out of business. 'cause I had to go face my wife and say, my, my just died. My dad just passed away. Yeah. We had a hurricane. 00:06:03 And I'm like, I gotta go tell her that I'm not gonna get a crop alone. Yeah. You know, and, 00:06:07 and so once you get, it's almost like a near death experience when you almost die something like, say you have a 00:06:12 heart attack, you quit smoking. Yeah. Or most people, we Are, the good news today is security 00:06:16 of worrying about anything. Right. Uh, yeah. I get that all the time about the Marine Party. You talk about interest 00:06:23 and you had a goal not paying interest. Mass point's very valid. And I bring this up to agricultural people. 00:06:28 You've got a lot of capital deployed in, in a very, in a generally low interest or a low margin environment. Interest rates went from say three to six or four to eight. 00:06:38 And people say, oh, they went up 3%. No, they went up 100%. I try and point this out to people that are so financial. 00:06:44 I'm like, if, if this cup went from $1 to $2, yeah, it went up a dollar, but it also went up 100%. And interest interest's, interest is an input. 00:06:53 Interest is an agricultural input. A very important input. And if it goes from four to 8%, it doubled it. Yes. 00:06:58 And that's where a lot of people I need to get their mind on. Yeah. Yeah. That cost, that cost is another one 00:07:03 that guys almost don't track. Because I mean, oh, when my credit line comes to it, the end of the year or it's built into different things, they don't, 00:07:12 um, they, they don't understand, you know, hey, that's a significant cost. Sometimes it's a salary, a good salary a 00:07:19 Farm. Lot of times it can be 40, $50 an acre of your operation is your interest if you're not really following. And 00:07:25 I think in this environment, I had someone tell me that they're, and this is people that I know that are, they're in ag lending and whatnot, they've got operators 00:07:31 that are at $70 per acre. Oh. There's no doubt of interest. Well, if you don't think 70 an acre is, is one 00:07:37 of your ex uh, cost of production, you're not thinking about it. There's a Lot of acres that aren't showing $70 an acre in profit. 00:07:43 So if you, you don't have it in there, you're under. Mm-hmm. And you, you know, another thing we gotta, 00:07:48 we gotta remember is it, it amazes me every year the news headlines is, you know, fertilized prices are up, fertilized prices are down. Are 00:07:57 You picking on us? What Hear me out. See, see You not tell Just jumping the gun. You're jumping the, I thought we were sponge show you was, 00:08:05 you was fixing to get the ball all. Alright, Now do you wanna hear the rest of The story? Uh, let's hear the rest 00:08:10 of the story, Kevin. Alright, so 84 30 John Deere tractor bought brand new $148,000. 00:08:17 This ain't been that long ago. You think about it. Oh, I know. Alright, uh, 8 3 48 R three 40. 00:08:26 You're talking 420 to $440,000 depending on how you spec that out. Basically the same functionality of the tractor. 00:08:35 But our, we talk about the fertilize prices going up, but we don't realize, we don't hear us talking about the cost per acre. 00:08:43 When I started farming, land acquisition, if you wanted to buy land, would by far was the most expensive per acre 00:08:50 thing was to buy land. Yeah. Now it's equipment is almost expensive. It's maybe not as much as land, but it's getting 00:08:57 No, it's overland. Is it? Yeah. It's overland. I mean, you take a cost of a new combine, tractor sprayer, anything. 00:09:04 Hey, you don't have to have new, I mean, whatever fits your size operations, what you need. But the fact is, we get so tunnel vision 00:09:12 on the fertility cost. Yeah. And we're gonna cut that, but yet we're going to go buy an iser tractor. Right. Or an iser combine. 00:09:19 And that ain't gonna make us the money that may that extra fertility. Right. No, that Now does that sound better, Galen? Yeah. 00:09:24 That's lot. See there you dump the gun on me. I I don't need the round paper bag hyperventilate. So everybody goes, gives you a 00:09:30 hard time about the fertilizer. They don't really give you a hard time. It's just, it's an input that we see. 00:09:34 I think that looking at fertilizer or the these inputs is like people becoming obsessed with gas prices. 00:09:41 You know? Oh, you see that down there at Kroger it's $3 and 19 cents, but the marathons $3 and 9 cents. Like how many gallons of gas do you burn a week? Uh, 20. 00:09:51 Okay. So that's one tank that's $2 mm-hmm. On 10 cents. Right? That's $2. You obsess over $2. That's a hundred dollars a year. 00:09:59 A hundred dollars is significant. You we like a hundred bills. Bills. But you might spend $4 going to the next, 00:10:04 But for god's sakes, you're obsessing about a hundred dollars a year when you're dropping a thousand over a year. Yeah. And that's how I look at sometimes these inputs. 00:10:12 You are walking right past this machinery expense because farmers love machinery. You're gonna go to the farm machinery 00:10:17 show like you always do. Love machinery. That's, that's a hell of a lot bigger chance at upsetting the apple cart 00:10:24 and getting over your skis and all those things than the fertilizer I think. Yeah. The but the problem is we, we try so hard to cut. 00:10:33 You know, I, we've talked about this on podcasts and I, I just thought about this. You know, I did that video on my regrowth corn. Yeah. 00:10:39 And you say there's a lot of corn on the ground. You know, you, I had a lot of corn on the ground, you know, regrow stalks. 00:10:43 And I got to looking at that like it's, it's never like this. Well, guess what? I decided to save money on drying, 00:10:49 let my corn dry in the field, not spend that money. What did it cost me in the field? Yeah. Because it shattered worse. You know? Mm. 00:10:56 Probably would've at least paid for the drying. Mm. And I would've been out of the danger of any kind of hurricane for, fortunately we didn't have it, 00:11:02 but so many times we can't get outta the way of ourselves. I do. I seen that happen to me this year multiple times. Oh, 00:11:08 We're all guilty of that. I mean that, I mean, that's a easy e that's our easy button, you 00:11:13 Know. But if you do what Galen says and you pay attention to every cost and what Kevin said, if you look at every cost, you'll know 00:11:19 what we talk about on changing farm changes on one of these episodes. Once you change this, well it's 00:11:24 gonna be an adverse reaction. Same thing with cutting costs. You just got to know which cost to cut or you're not. 00:11:31 Maybe you're even in the negative after you cut the cost. I was in that situation. Sometimes it's a piece 00:11:36 of ground we're farming, we need to cut. Yeah. Right. We need to get rid of it. But you know, as one of you guys has pointed out, 00:11:41 that isn't always easy either. 'cause you, if a landlord has 10 good fields and one bad one, you can't tell him you don't wanna 00:11:47 farm the farm the bad one. So that, that, that's kind of one of those things you get hung I'm out, I'm the bad one out. 00:11:53 Sublease it. Yeah. Sublease it's chain. That's right. But, uh, I think part of the fertilizer equation that, that people struggle with, 00:12:01 it is a little bit more of a moving target. If you, if you bought a tractor and you know what the payment is on 00:12:06 that when you walk out the door, that's defined. But then someone like me shows up and we start talking fertilizer 00:12:13 and it becomes, okay, it's a moving target. And a lot of times farmers don't really have guardrails as to where should I be. 00:12:19 And then you get in season and, and you get someone that goes and does a $50 foliar application 00:12:25 because that is what you're supposed to do. Right. But okay, you're not tracking that in the overall fertilizer budget. 00:12:32 And you've heard me say, I always look at, uh, let, let's just say that, uh, December corn was $5. 'cause that's the only kind of math I can do. 00:12:40 It's not that much. Let's be optimistic. And you're 200 bushels, that's a thousand dollars a good guardrail for starting fertilizer budget. 00:12:48 Be 200 bucks an acre. And then you can either see whether you're a little bit better than that. 00:12:52 Yeah. Or you're a little bit more. And if it's corn, I always try to keep that nitrogen expense, 55% or less of that fertilizer spin. 00:13:00 Okay. Now you can start building backwards. And even if fertilizer's a little bit higher, when you start plugging in individual nutrients, 00:13:07 you can start thinking, does this make sense for Me? Yeah. So you, you're going with 10%, 00:13:10.525 --> 00:13:10.845 00:13:11 but I think that you like my, you like my comparison to gasoline prices that people just obsess over in fertility because it seems like it's the same thing you're forgetting. 00:13:19 Mm-hmm. Well, that person that's obsessing over gas prices, forgetting that they also bought a Cadillac Escalade, 00:13:23 that they, their job, their job should have had 'em in a Ford Pinto and they got a 2025, uh, Escalade. 00:13:29 And it's like, yeah, you are obsessing over 10 cents on gas. Maybe you should have thought about that $90,000 car. Right. 00:13:36 And that's where I think that, uh, and I don't farm, so it's easy to say we get enamored with equipment and a lot of equipment is sitting there 00:13:43 and it'll make you any money when it's not running. That's very true. It costs a lot of money when it's sitting there idling too. 00:13:49 We don't think about, but idle funds Travel time, Philip. Yeah. But that's one thing I like about y'all agri liquids 00:13:55 is, is you're not, you're not out there just trying to sell the product. You're, you, you yourself 00:14:00 and your team are analyzing, you know, and if you don't think it's a year when you need, when you'd have to have it, you're 00:14:06 gonna recommend not to use it. Yes. You know, and I know that's sometimes counterproductive to sales, 00:14:11 but it's not counterproductive to, to people coming back buying from you again into Long term sales. What we 00:14:16 said, we're gonna give some tips and ideas on navigating this. We've kind of already heard them. 00:14:20 You talked about inventory. I, there's a lot of farm, larger scale farms have a lot of stuff sitting around and they're gonna say the same 00:14:28 thing, but I need that, but I need that. Do You really? Yeah. But they're showing on the balance sheet. 00:14:32 Does their lender, is it showing up in their debt to asset ratio for their lender to see that it's a asset to contribute to their business? 00:14:39 That's, that's the little things. How about your field work? You know, a lot of people think, well, 00:14:44 until I've got it planted now I don't have no money out there, but yet they've spent 75, $80 an acre through the winter getting their fields ready 00:14:51 for spring platinum. Well, that needs to be on your balance, on your monthly balance sheets that need to be there. 00:14:56 And folks, if you're doing balance sheets once a year, you, you need to be doing 'em monthly. 00:15:01 You need to be changing and see where you are. There's a lot of moving things. You gotta be, I wanna be the guy that goes 00:15:06 and tells my lender, Hey, this is what you're fixing to see. I don't want my lender to call me 00:15:10 and say, Hey, do you realize you're here? Because I've I've been in that situation pro proactive to the reactor. Exactly. 00:15:16 Anything you do in there, you've Been an ag lender. Are, are, are filters an assets? Our filters an asset. Yeah. Yeah. 00:15:22 If you've got 'em in your shop, they're an asset. Anything you have in inventory is an asset which needs to be counted. 00:15:27 Every dollar that you spend on the farm needs to go in some kind of bucket. And you need to be able to look at that, each one 00:15:35 of those buckets and say, this is what I'm spending on Preta Is nasa. Yes, sir. 00:15:38 Can I put an asterisk? Can I put an asterisk on the question I asked you again? I may have done an episode with Mr. 00:15:43 Kevin and, uh, potting, uh, cutting the curve podcast. And we found out for sw they from a piece of equipment that he hadn't had for more than a decade. Is that, that's, 00:15:52 That, that, that's inventory Obsolescent. So, so good. I'm glad you brought that up. Dad just told me Sunday he said the, it's ant the t 00:16:00 that they had from the excavators that they ran. Yeah. Um, he grad, local grading company come by, picked all of them up. 00:16:08 They called him and said, look, we, it was, I mean, it, it was like, you know, just a fi not even a half, a five gallon bucket of teeth. 00:16:16 He said, it's 1600 bucks for those teeth. He said, what? What would you, what You know, 00:16:22 what do you want me to give you for 'em? Dad said, well, what are you happy with? And he said, 12, $1,300. Sound good to you. 00:16:28 He said, oh, yeah, yeah, it sounds good. Wrote a check. I mean, that's $1,200 something on the shelf. Yep. Collecting dust 00:16:35 Didn't even work for you anymore. Yeah. I mean, you couldn't use 'em because we, you know, they had sold this 00:16:39 Day and time. You gotta be frugal. I said, So tip the tips that we're giving the viewer is get rid of Inventory. Dad didn't put 00:16:44 the check in my name though. I I just don't On he he a nice Christmas price. Yes. He deserved it. Know your 00:16:52 Cost of production. Uh, keep an eye on inventory or even get rid of dead inventory. Yeah. Estate inventory. If 00:16:58 It ain't me. I had a landowner. He, I loved him to death. He was like a second grandpa to me, 00:17:03 but he had so much of his old equipment sitting around and, and people would try to buy it. 00:17:10 Nah, I might, I might need that one day. Well, you know, now his children and grandchildren are having clean all that stuff up 00:17:17 and it has no value to it except scrub iron. I mean, it's just scrap iron. Well, and it's sad. Do you think one other mistake I see sometimes when it 00:17:26 comes to finances and it's hard to fight it is, uh, you know, making sure you have enough working capital 00:17:31 to get to the end of the year. Because, you know, some guys, okay, let's say the lawnmower was on the balance sheet 00:17:37 or whatever, but you wanted to go buy a new lawnmower. A lot of times, you know, if it's just a smaller piece of equipment, like in my next woods, maybe it's a track fill 00:17:46 or something that seems insignificant. But when you buy an asset that's gonna pay its way over the next several years 00:17:52 and you pay cash for it, and then you're at the end of the year, you're going, well wait, do I make that fungicide application? 00:17:58 And you look at the bank account, well, you haven't, you haven't really thought through your, your cash flow. And then do I leave myself working capital 00:18:07 to make it through the year? Because you guys have said many times you've got to finish that crop out. 00:18:13 And if you've, if you're sitting there going, no, no, that, uh, that new tractor's paid for, 00:18:18 there's no money against it. But then I can't afford to finish the crop out. Well then it didn't pay for, you know. Yeah, that's 00:18:24 Exactly right. And you know, cash is queen in today's environment. We was always taught cash was king 00:18:29 and you know, Dr. Cole working with him, he said, no, it's queen now in this high interest rate environment. 'cause the queen can move anywhere on the chess board 00:18:37 that she wants to live where the king can only go one direction. Yeah. And, and they I see it so much 00:18:43 and you, you know, he was talking about borrowing money that was, you know, our capital having capital cash flow there. 00:18:49 That was one thing. One of the mistakes I'd done was back when we finally, we went through some times just like Matt and, 00:18:56 and it was just, it was terrible. But then when we finally borrowed money, we borrowed enough to get by, but we really didn't borrow enough 00:19:03 to get our accounts payable like it needed to be. And then we still having to basically own or finance with some of those companies. 00:19:11 And um, that's, that's been a regret of mine. If I could go back, I would've borrowed the extra cash then. Yeah. I, you know, I'm pretty sure I could've got it. 00:19:20 I don't know that, but I feel like I could your words and then Well, you know, well the problem Galen is that's how we started out the three of us. 00:19:28 Yeah. It is. It was on our word. It was a handshake. Well now it's, you gotta fit in this box and if you don't fit in this box, and, 00:19:36 and a lot of times these lenders, they don't have a personal relationship. They don't know you. That's right. 00:19:40 They don't know how hard you were. And they have to answer to a lot of examiners. Like there's 00:19:44 Things that, there's a lot that used to happen lot. Exactly. And it, it really complicates things. That's, and that's what makes cash such a queen is 00:19:52 'cause it's got so much power, But literal cash, hundred dollars bills. This next generation don't even know what that is. 00:19:59 Apple Pay or Yeah. I went, I literally went in a restaurant and, and there was a, they was, you know, was waiting 00:20:05 to get in there and it said the credit card machine was broke down. And I would watch people walk in, this is in Nashville. 00:20:10 Walk in, see that sign, walk out. I don't have any cash. Yeah. You know. Yeah. And, you Know, look, 00:20:16 we're we're seeing a movement at home now that they're offering discounts if you pay with cash at restaurants. 00:20:21 And I I like that. Yeah. You know, the fees just come up. I got inventory management, 00:20:27 I've got know your cost of production. I'm not sure I still got something to tell the viewers out here. 00:20:31 What's your tips in navigating, you've been on both sides of it. You've been the ag lender, you've been a farmer, 00:20:36 you've been a farmer that was pushed up against the, up against the ropes a couple of times and you had to put, uh, your, 00:20:41 your coat hangers on your balance sheet. What's your tips? What's your, what's your, 00:20:44 what's your lesson? You got a lot of them. Well, I mean that they pretty much, they pretty much covered that. 00:20:49 Yeah. I mean, and, and the next thing is don't save yourself out of business. Yeah, yeah. You know, we get so That's 00:20:54 Right. That's very true. We're knee jerking because corn's full of $4. Yeah. And there's still nutrients out there 00:21:00 and practices you've gotta do or you're gonna make, instead of making 200 bushel, you're gonna make a hundred trying to save, you're going, 00:21:06 trying to save $200, you're gonna cost yourself $400. And I, I did that last year song. You know, So there's those people that they, you can count 'em 00:21:14 to always stick to the same messaging. And there's, and I'm in no way being mean. Matt has stayed with that for, 00:21:22 and we've, we recorded a podcast. He says it, but a year ago, he say, well, the thing is it's not wrong 00:21:27 and it's just by God first, you know, spend less than you earn. I mean, there's certain things you should know, uh, 00:21:33 you know, eat more exercise, eat less, exercise more. There's all kinds of things that are pretty simple. And it's not bad to keep going back 00:21:39 to it when you just said you can't, you can't keep cutting well in your way to prosperity 00:21:44 because at some point you still gotta have an investment. It takes some money to make some money. 00:21:47 Prime example is taking corn outta my rotation last year. Yeah. We talked about that on podcast. 00:21:51 What cost me 200 bushel, 200 pounds of cotton on the rotation and about 12 bushels of beans the following year. 00:21:57 Or it will cost me that this year because, and it, I went bees on beans. Yeah. And, and it just, I mean, 00:22:04 but I'm looking at, it's a negative on the corn and, and It's, but you Can't look at just one crop. 00:22:08 You gotta look at your whole operator. Yeah. Global. Yeah. You the same thing when you fertilize, you know, 00:22:13 if you cut back on that fertilize and that crop's not runs through stress, it don't have the food source there to get it through 00:22:21 that stress, then the next thing you know, the money that you would've spent on fertilize, you're having to do a rescue with fungicides or insecticides or 00:22:28 Whatever. It still don't fix that. Exactly. You're, you're never, you'll never get back what you lose in a crop. 00:22:34 And you might slow the, slow it down a little bit. Yeah. Is it revenge Galen or I, I don't know. 00:22:39 The the thing is, and we, it, it's hard because you'll hear us talk a lot about, uh, a good fertilizer program is really probably 00:22:47 as much art as it is science. Because to your point, and to, to Matt's point about if you don't spend enough, okay, let's say you're going for 240 bushel of the acre corn 00:22:58 and that phosphorus number is just hitting you across the face of it's too much. 00:23:04 If you cut it back, then you might restrict yourself to 180. And if you go into what you should do, 00:23:10 maybe you make the two 40 and mother nature's kind to you and you push beyond that. 00:23:14 But there's a point if you pull it back, you don't give yourself that buffer. And if you can push up on that top side, 00:23:20 sometimes that was your profit. Well, you don't have the opportunity cost if you don't put the money in. 00:23:26 That's right. So just what you're saying. Yeah. If you, you might make two 40, but, but Right. If you put it there, you might, you might not, 00:23:32 but if you don't have it there, you're never gonna have. I know. Yeah. That's, so there's, you 00:23:36 Have no opportunity for the advancement knowing that Right. Level to be at where I'm at least over the hump of 00:23:41 where I have the opportunity. But Neil also hearing A lot about at some point on these down economy, 'cause this not last a year, uh, 00:23:49 we're old enough to know that this, this doesn't go away next year. Well, It's, it's typically seven year cycles is 00:23:54 what they tell in the business. But It's looking better. I mean, the last month or so, I'm 00:23:58 Actually, you know, I'm more excited about this year for our area. I almost am too. I don't, because 00:24:04 We know the bottoms end. Look, if Matt's excited, then I think everybody should be excited. We're good. We're good. I'm, I'm maybe not excited, 00:24:11 but I'm not just sick of my stomach, you know, because I, I think that there's an opportunity here to once you've been through those lean years, 00:24:17 but what you can't do, I say this all the time, you can't kneejerk, we're looking at a 10 year plan or a five year plan just because corn drops out one year. 00:24:27 Yeah. You can't just change your whole frame of mind to try to fix it in a, we don't fix our 00:24:32 plants at the end of the year. We fix 'em as we go. And, and if you don't watch it, you'll be so short minded that you won't, you're going your plans if you're 00:24:41 here today at farming. Yeah. If you get a crop on this year, you're pretty doggone successful. Yeah. Because of 00:24:45 The, the bot. The folks Are, you've done something. Right. The folks, The folks that are really upside down 00:24:49 are probably not gonna get renewed. By the way, you know, temple and Chad get mad at Matt when he always 00:24:53 says failures and success. I was gonna go, when you start talking about him, uh, uh, and his, and if he's optimistic, I would say pessimist. 00:25:01 And since I'm looking my way A hothead. Yeah. Pessimist. Hothead. You know what you also said, one of you 00:25:08 that about navigating this since that's the idea of this episode, was to say hi to you. Navigate it. I think it's almost being realistic 00:25:16 or having some acceptance of ag, just ag cyclical business. And you're gonna have these things 00:25:22 and if you truly are just a, a mess, maybe this ain't ain't for you because there's gonna be, there's going, when 00:25:29 I asked my as Seth that same question, Well, I'm not being mean. I had a, I had a guy tell me old timer, he said, 00:25:36 in a 10 year period, you'll have two great years, two terrible years, and then you'll have six that are average 00:25:42 Survival years. And if, and it might, you may have been the one that told me that, I don't remember, but still old 00:25:46 Guys did. You started, 00:25:47.375 --> 00:25:47.815 It started with old guys, Old timer side. I don't think it was you, but if you, 00:25:51 if you failed your war chest on the two bad, the two good years, yeah. Then you can afford the two 00:25:56 bad years. And then the other one Keep this other six or Base hits and we can say what we want to, you know, 00:26:02 they're, we farmers live well, they do well. And it don't matter what corny is, you're going your life, your lifestyle's gonna be the same until you go broke. 00:26:10 Till you have aachi. I Remember reading something somewhere that, and we we're fortunate that we get to do this in farming 00:26:17 and in the great United States is that freedom is about getting to choose your pain as much as it is, you know, being able 00:26:26 to experience the other side of it. But everywhere you go in, life's gonna be a little pain. We're kind living through that right now as far as 00:26:33 that sharp pencil and agriculture. But at least it's our choice and we can look at it and decide how to navigate through 00:26:40 It. And if you know your cost production and know your inventory, then it's easier to navigate that if you've got, 00:26:46 you can't navigate something without correct data. Yeah. Yeah. You know, there's been times when I've made decisions, million dollar decisions on uncorrect data 00:26:54 that just don't work well. It's just going, rolling the dock. It goes. Your thing about you can't see your way into 00:26:58 prosperity if you don't really know your cost of production. You're starting to make decisions about the investment 00:27:05 without knowing what the investment's even returning. Exactly. And that, let me look at your whole portfolio and saying, we're gonna sell these stocks. 00:27:12 Well why? Because they're the first three I threw a dart at. I mean, that'd just be, and that's about 00:27:17 what you're talking about if on these dis spending decisions. Yeah. Well, Kevin, 00:27:22 Well I think the one thing that I've learned over the years is, you know, you you want to try to, you just talk, let's buy this piece of equipment 00:27:31 so we don't have to pay taxes. We need some depreciation. And I'm at the age now, I like to pay taxes. Hmm. 00:27:38 You know, I, I wanna be in a position that my accountants has done all they can do, and then I got to pay taxes. 00:27:44 And that, that is a really good Year to have. You never, you never leave your way, uh, 00:27:48 yourself a pathway out if you don't pay taxes. Yeah. Because if you're always paying it forward to avoid that, if you ever decide, you know what, I'm done. So 00:27:57 I, I hope I get to pay 'em this year. LA last year I didn't need, I didn't need any today. So good lord took care of it. There 00:28:03 Have been a lot of instances of farm, uh, equipment sale and purchases, uh, at the end of December 00:28:09 that were in hindsight, pretty stupid to Yeah. Stupid. Yeah. Well the problem is if you got the cash on hand to do it mm-hmm. 00:28:16 But when you acquire a debt Yeah. Yeah. And then you got a payment and then you have a lien year. Yeah. That payment term and then you can't 00:28:24 Debt for something you don't need to avoid taxes is pretty poor decision Because like my wife and was address was 00:28:29 on sale, said, well, you got four. Yeah. But it was on sale. Yeah. And so that's one of the things we don't need. 00:28:34 We ain't going there. That's one of the things we're not gonna recommend. We're not recommending that you buy a bunch of 00:28:38 Stuff. Don't, don't get involved with what the wife wants. All We're gonna leave it, we're gonna leave it. 00:28:41 It there, I think how to navigate, I love the story that when you f when you're putting your lawnmower on the balance sheet, you know that things were 00:28:47 getting up against the wall. I had some bad times about 20 years ago, I went into the bank and I needed some money 00:28:52 and um, the banker lady says, um, you got a p and l, you know, your profit and loss statement, a balance sheet. 00:28:58 And I said, sure. And she says, well, I'll just use the one from last year. Your number's pretty much the same. 00:29:03 And this is where honesty, I just said, uh, you know, Cindy, I, I made all those numbers up to then too. 00:29:08 So I really, Yeah. Show me what I told you last year and then I'll tell you a different one this Year, talking about how to have 00:29:16 to be an agricultural downturn. And we know that the economy's a little bit tough, but you know what? You always got friends and they're 00:29:20 right here at the grain race. You can pull up a chair, pour yourself a drink, you got fring you can talk to. 00:29:23 And figuratively, we want you to be with us. We do a lot of these episodes. This one was sponsored by our friends and Agro Liquid. 00:29:28 Galand Beer is not only a farmer in Oklahoma, he is also an employee with Agro Liquid and he's a darn knowledgeable one. 00:29:34 So anyway, we really appreciate you being a sponsor here. If you wanna learn more about agro liquid's, lineup 00:29:38 of fertility products, you can go to agro liquid.com. So next time, thanks for being here with ca, Kevin, Matt, and Galen and me. 846 00:29:45.205 --> 00:29:46.885