Will Supply Chain Shocks Make Farming Profitable? | The Granary

00:00:00 Will conflict in the Middle East improve American agriculture? Will the supply disruptions and the prices make us more frugal but also more profitable? That's what we're talking about in this episode of 00:00:11 "The Granary." You ready for a conversation with some real farmers about real issues? And the best part? You're invited. 00:00:18 So pour yourself a drink, grab a snack. Most importantly, pull up a chair. Welcome to "The Granary." 00:00:28 Hey, guys. Hey there. Welcome to another fantastic episode of "The Granary." It's a fun one. It's timely. By the time you're watching this, maybe the Middle East conflict is 00:00:40 over, although I kind of doubt that's going to be the case, because effectively, I think there's been a Middle East conflict for as long as I've been alive. 00:00:46 I'm sitting here at "The Granary" with our sponsor, Tommy Roach with Nature's. We thank you very much for being here, making this show possible, making it so we 00:00:53 can talk about these cool things with our friends at home. And he's joined by Kelly Garrett and Matt Miles. You know Matt. 00:00:58 He's been here a number of times, farms down in Desha County, Arkansas. That's known as the Delta. Kelly Garrett from Western Iowa. 00:01:06 Okay, you proposed this topic, Tommy, and whether there's still a problem in Iran by the time the person watches this or not, we have 00:01:14 seen this is our supply shock number four. We had the COVID timeframe. We didn't have shipping containers. 00:01:20 We had then a Trump trade war, and then we had another one. I'm trying to remember which one it was. Now there's this one. 00:01:26 Fertilizer up massively big. You're in the fertilizer business there at Nature's, so you can tell us all the fertilizer numbers. Fuel, he owns a convenience store. 00:01:33 You buy tens of thousands of gallons of diesel per year for your farm and your trucking business. This is causing us to have to rethink 00:01:41 inputs, and diesel is an input and fertilizer is an input. So you proposed this topic. What did you think we're going to do when we get into 00:01:47 this? I think the answer you're going for is it should make us better at producing. I hope so. So phosphate, so year over year, this is 00:01:57 April 25 to April 26 numbers. Doesn't matter if it's DAP or MAP, they're up around 13% to 15% 00:02:06 year over year. What's urea? You want to take a guess? I would say it's double- What it is- 00:02:12 ... based on that high price of pots ... is current price today? About $800 a- Year over year. April last year, how much percent increase? 00:02:19 I'll just tell you. 45%? 55% year over year. And we should point out to the person, many of them that are watching this, we are recording this in the first week of May in 2026. 00:02:30 Yep. These things completely different one week, 10 months from now, whatever. But this is where we are. 00:02:36 Rapid, rapid escalation in critical inputs. So UAN, which a lot of producers use in season, it's up around 33% year over year. 00:02:48 Well, I thought it was more than that. No. Yeah. It feels like- Seems like it. Feels like it. 00:02:52 It feels like it. Yeah. It's really easy to calculate what it costs when we're putting out about a buck a point. 00:02:57 Right. Yeah, exactly. So every buck you put out's a dollar. What'd you say it's how much is up? 00:03:01 33%. Yes. And it doesn't matter if it's 38 or- 28 or 38 ... 28, 32. All right. 00:03:06 Doesn't matter. And the number he just pulled up on fuel, okay, fuel is up just in two months. 00:03:13 At my gas stations, it was 3.40 and now it's over five bucks. Like Matt calculated, it's 55%, 60%. 00:03:18 52%, 52% to 55% higher than it was just two months ago. Yep. Fuel's an input. 00:03:24 You probably use less of it per acre than you did as a kid because maybe we're going across the field less. I don't know. 00:03:31 Are you becoming a better farmer because of fuel prices? Well, 00:03:38 specifically fuel prices, yes. But in the last two years, we've had to become better farmers from everything that's went on in the past. 00:03:45 Economics. Economics, yes, and we finally got a situation where it looked like there might be a break-even point, a little light at the end of the tunnel, some government 00:03:52 subsidies that we're going to get, the POC payments, some things like that, and then bam, we get our knees knocked out from us again. 00:03:59 Fuel and fertilizer is one of the two biggest inputs that we have. So even though it don't sound like a lot, it's still because we're putting them 00:04:06 in our irrigation systems- Yeah ... trucking and even the parts and stuff that we get now, you probably have a fuel surcharge on your- 00:04:14 Oh, yeah ... inputs to me. The price you brought them to me for is different than it was- I think if you order something off of Amazon, they put a fuel surcharge on there. 00:04:21 They do now. Yeah. Yes. I thought I was getting an email from Tommy into integrated ag, just say hello. It was not. That was not... It was to tell me that nitrogen and boron were going 00:04:29 up. So we're into fertilizer, which obviously he's a Nature's guy, and he likes to talk about what fertilizer is. You don't use as much fuel as him. 00:04:37 You don't farm cotton. As he points out, you've got to go across the cotton field seven times- 00:04:42 Right ... eight times, 10 times a year. You don't farm high- No till 00:04:46 ... and you don't till. So you use less. Earlier today, though, we talked about diversity. My trucks use about 10,000 gallons of fuel a week. 00:04:53 Yeah. Mine use about 7,000 a week. Yeah. How many wells you running? 227. 00:05:00 And they're all in diesel? No, they're about half and half. Are they? Okay. 00:05:02 Yep. So by the way, to the person that's tuning into the show, these guys, in addition to their farms, have diversified and have trucking operations. 00:05:08 So yes, the average farmer is not going to be going through 10,000 gallons of diesel per week. 00:05:13 No, but it's all relative. And- It's all relative because also it knocks back your revenue has to go a hell of a lot further to get you profitable when you're spending that kind of money on fuel. 00:05:22 Because fuel in a trucking company is about 25%. Probably on a farm, I'm not sure what it's going to be. Probably 10%. 10%. 00:05:28 Yeah. Yeah. So are you making any changes this spring because of diesel? Not on the trucking, but on the farming side. 00:05:39 Not necessarily because of the diesel, but you're just looking at cost overall. But if we could back up for one second, not everybody 00:05:46 has as many trucks as Matt and I do. Mm-hmm. But if a truck gets six miles a gallon and the fuel was three, that's 50 cents, and now the fuel's six, now it's a dollar a mile. 00:05:55 That affects everything that we're talking about today. It affects everything we buy, everything we wear, everything we eat. So that's just a matter of inflation right there, and that's the 00:06:04 surcharge. That's the surcharge with Amazon. That's the nice email we received from Tommy last week. Yeah. 00:06:09 That's what that fuel affects. So does the fuel affect on a per acre? Not when we're looking at what the tractor goes across, but we're missing the big 00:06:15 picture of everything that we're using when we go across. Everything we touch. 00:06:19 The seed. Yes. And so, do I feel like I am changing something because of fuel? Not that direct, but we are doing some different trials with XtremeAg 00:06:29 to try to reach new levels of nutrient use efficiency. I'm going so far with these trials that my son and my agronomist told me I'm being radical. 00:06:36 That's good. And I think it's a great time to do it- Yeah ... because it's needed in agriculture to learn because of the regulations that we 00:06:43 talked about, and because of the costs we're talking about too. But hence, it's trials. 00:06:47 Yes. So you've got to have the trials to know what you can go forward with. Yes. 00:06:50 You have to. And so are you- You have to get radical. Like Chad trying to kill his corn with boron. Yes. 00:06:54 You got to see how far you can go and then back up from there, honestly. All right, are you going to cut back your fertility spend a whole bunch and just 00:07:01 say, "Screw it. At these prices, I've got to. I've got to just use less fertilizer, period"? And I watched a Granary episode we were filming earlier, where we were talking 00:07:09 about nitrogen reduction or fertility reduction. I feel really good to be able to say this statement, because 15 years ago, 10 years ago, I probably couldn't. Being a part of XtremeAg, working with 00:07:21 the compadres I've got, we have started doing this, what? Three, four, five years ago? You probably before that. 00:07:27 Mm-hmm. So we've already cut so much of the fat on fertility- Yeah 00:07:31 ... I'm not sure we can cut it very much more. I was fortunate to be able to book some of the field- Are you using 20% less than you did before XtremeAg? 00:07:39 25% less nitrogen. Yeah, that's a biggie. My phosphorus is about the same because it's organic, it's poultry litter. And my potassium, I'm not using a lot 00:07:49 less because I've tried that on my particular farm- So the big deduct was on nitrogen, and the other part is you did actually take a little bit of that budget and put it back in on 00:07:59 macronutrients. Right. Yeah. That's exactly right. But you're still down. Your spend is still down on a per acre basis across the five commodities you produce, still 00:08:08 down on the fertility spend. Yeah. Well, and for the last couple of years, we've trimmed. I think a farmer that's still in business today has trimmed about all the fat he 00:08:18 can. If he's still in business today and he's doing okay, he's trimmed for the last two years, because this ain't the first rodeo we've been through with these- 00:08:27 No, supply and supply shocks and prices ... the last two years have been destructive. Yeah. 00:08:31 So we've already gotten in that mode. I just don't know how much more we can go. Well, I think- 00:08:36 That's a great question. So- How much work can we- It's easy for some... I don't go on a diet very much. You don't need to. 00:08:44 I mean, look at him over here. But for a 300-pound guy, it's easy to lose that first, let's just say- 00:08:50 Say 50 or 60 pounds. Yeah ... probably. I know we probably, because that's water weight. But then that extra 10 pounds, that's where 00:08:57 it gets tough. So you saying you've already trimmed a lot of fat off, that was the easy part. 00:09:02 Yeah. But I think there's still a lot of people that don't understand that you make 00:09:09 bushels, generally speaking, on the tail end, and people aren't even 00:09:15 touching that, in my opinion. Yeah. I think when we started with XtremeAg, the fat you're talking about, when we started with XtremeAg, it was easy for me to say, and it was easy for me to learn 00:09:24 from these guys on the Fringe Acres because of how much more intensive they were managing than the ice cream guy was. 00:09:30 Mm-hmm. And so it was easy for me to see where I could improve my yields. Now, I would imagine as we go forward, I will still find a way to improve yields. 00:09:38 I hope so. I hope I can still find a way to improve yields. But right now, I don't see where I can easily improve yields, but I do 00:09:44 see where we can go through the technology and things we've learned to put it in less expensively. 00:09:49 Be more efficient. Yes. That's where the next ROI comes from, is being more efficient. Tommy, there's a lot of guys, sorry, operators, guys, gals, whatever, 00:09:58 that they believe they've done big, significant things, and they think, "Oh, I've already done that easy cutback," and maybe they haven't. 00:10:05 When you see a lot of them are still following the recommendations on applied fertility or they're still going across that field one more time than they really, two more times than they really need to 00:10:16 because Grandpa said you should or, "If I go out and till, it looks like I'm a hard worker," all that. I think there's still a lot of easier 00:10:25 pickup across all of American agriculture. Maybe not here and here, because they started really trimming it down a few years ago. Is that an accurate assessment? 00:10:34 That there's a lot of easy trimming still to be done? To ask the question, is a supply shock from Middle East going to make us better? I think there's a bunch of operators that could make some pretty easy 00:10:44 cuts. So I've been on the phosphorus, if you want to call it, kick for a while. It's easy to trim, 00:10:52 we'll just say 25, 30% off of a pre-season broadcast phosphorus treatment, which we've had discussions about it before, which is really ridiculous, but 90% of the growers, that's what 00:11:07 they do. Because that's the easiest place to put it. I can count on two hands the number of large growers came to various salespeople 00:11:19 within the organization, me included, this year. Said that they were fed up because we mentioned how much dry phosphate had increased year over year 00:11:30 when we started. Yep. They were tired of spending that money on phosphate and not getting a result, and they're saying, "I'm going to a liquid diet." 00:11:42 And I think, I may be wrong, for the people that are looking at pounds, you're probably going to croak. But when you talk about liquid diet, you can actually, if you want 00:11:55 to call it spoon-feeding, great. If you want to target points of influence during the season, that's where you gain your efficiency. It's not all about 00:12:04 pounds. Well, that's where, we're all looking at this as cutting expenses. 00:12:11 To a lot of farmers, I would say it's not cutting the expenses necessarily, if they already think they've cut, reallocating those in the right timings, putting them in the right places. 00:12:22 Yeah, right. Instead of front-loading everything first, Kelly always uses the easy button. It's not easy to spoon feed. It's not easy to go from dry to liquid, but you can actually 00:12:31 improve your ROI and use probably less money because you're more efficient with the applications that you're making. 00:12:38 What's your word for reallocating? Reallocating? Relocating. Yeah, relocating. So here's the big one, though. 00:12:46 We said, is this going to be because of the Middle East thing? And that was your idea. This, I don't think is just a Middle 00:12:53 East-related thing. Obviously, I don't think these economics on farm get drastically better in 00:12:59 the next couple of years because of the- Phosphorus was high before the war. Right. 00:13:03 You've got on two supply reasons, supply of fuel and fert, and also supply globally of the stuff you 00:13:10 produce. Oversupply. Yeah, oversupply. Yeah. So I don't see the economic situation, so whether this still thing in the Strait of Hormuz or it's the next thing or it's China or it's 00:13:22 whatever, I think this is the new dynamic where we're going to be. I don't see some huge reduction, and these guys buy this and you're in the 00:13:29 business. I'm not the fertility person here. I don't see how somehow it gets drastically better six to 12 months from now or even 24 months from now. 00:13:36 I think it will take, if things stopped right now, it would take a good nine to 12 months to kind of go back, I won't say go 00:13:45 back to what it was, but it will take that long to get back to normal because 00:13:51 how you make, you need one nutrient that we've talked about to make phosphate. You need sulfur. 00:13:59 Uh-huh. And every day you see another missile or see another drone hitting an oil refinery, and guess what? That's taking sulfur off the market. 00:14:08 Right. And then there's the energy. You degrade or destroy energy production. What do we need to make fertility? Energy production. 00:14:17 What do we need to have fuel? Energy. There's a lot of climbing back to make this. Well, and the length of this thing, like you said, see, I'll tell you how 00:14:27 naive or stupid or whatever word you want to use I am. Day before the war, I bought 90 days' worth of diesel. Trucking company, farm, whole operation, 90 days' worth. 00:14:35 I thought there's no way this administration can't go over there to Iran- And just get this all cleaned up 00:14:41 ... and disintegrate them in less than 90 days. Okay? Yeah. And we're probably 40 days in now. 00:14:47 I think we're pushing more than that. 60, I think. Yeah, 60. And so I got 30 more days of thinking I was smart, and then I'm going to look 00:14:55 like probably one of the dumbest guys in the world. Well, no, you're not. There's the person that didn't pre-buy anything. That didn't do anything. You're right. 00:14:59 The person that didn't pre-buy anything. So what about the fact that, and we've covered this in different ways, if we have regulation, whatever. I don't see a big yield deduct. 00:15:07 I don't see these going to go down and these are going to go down in what they produce. Do you? 00:15:11 Oh, I can easily take 20, 30% of phosphate or nitrogen, just take it right off the table and you wouldn't see any 00:15:21 sort of negative yield response. I noticed you didn't say potassium. Correct. 00:15:26 So do we say this at three years and we say, "Boy, I'm glad that we were already going down this road," and now look at how much- 00:15:32 In three years, we can say it was a painful experience, but look what we learned. Well- 00:15:35 But unfortunately, I think we're so stubborn we don't learn unless it is a painful experience. 00:15:39 Well, that's most people. Remember, you got to touch the hot stove when you're a little kid and all that kind of thing, right? 00:15:44 But the thing is, we've done a fairly decent job. Kelly's done better than most of us at improving soil health. Mm-hmm. 00:15:50 And protecting the nutrients that are in the soil. Yep. And so we could probably all of us go a year, not without potassium, but not without some nitrogen. 00:16:00 Yeah. But we can go a year without phosphorus. In most instances, we can make the same yield in a year. Now we get two, three, four down the road, maybe not, but hopefully this is not 00:16:09 going to be longer than 90 days, but hopefully it's not two years. In my soil, I can go a long time without dry P and K. 00:16:14 Yeah. I can go a long time. I can't remember the last time I put dry P and K on. So we're talking a lot about this. It certainly should be a boost, a shot in the 00:16:20 arm to Nature's because this is absolutely telling, this is a signal in the marketplace, if you want to use economic terms, 00:16:28 "Hey, we should go to more precise lesser ratios of lesser quantities, more precisely applied." Stuff like yours, put it on at this exact 00:16:39 timeframe in July 13th when my plants need it. This should be a shot in the arm for you guys, and this should be while they're over here 00:16:49 losing market share because they don't have the supply or the price, you should be gaining. 00:16:53 Well, knowledge is out there because everybody's seen the corn charts. Guess what? Mm. 00:16:57 I made one for soybeans. My favorite- Time, it's coming ... illustration. By the way, to the person that's watching this, my favorite chart that of all the ag events I've been to that he put out with Nature's shows 00:17:07 the exact time in a corn plant's life when it needs what it needs, and it always makes you think of what you said at this very table, I think it was, or maybe it 00:17:14 was at your farm. You can't give a baby a year's worth of food on a plate and expect him on January 1st that somehow it's... 00:17:22 Or not even a baby. Yeah, like breakfast. You don't eat your whole food at breakfast. Yeah. 00:17:26 That's what I said. I thought there was something about a baby. Yeah, that's what I'm saying. You don't feed a baby. 00:17:33 You got a baby that's got to eat all the time. You don't feed him one meal at breakfast. And say it's going to work for him. 00:17:37 You spoon feed it out. So let me ask you this. What is the number one, and either one of y'all answer it, 00:17:44 the number one hardest thing for a farmer to give up? It's not tillage because we've seen that happen. It's not seed varieties because they change every two years. 00:17:57 Complaining about the weather is the hardest thing for a farmer to give up. You're right. No, I'm talking about input-wise. Fertilizer. 00:18:03 Yeah. Fertilizer. To get a farmer to reduce his fertilizer or go to a liquid diet, I'm still scared of a complete liquid diet. 00:18:09 Because they think that somehow it's going to cost them massively, and they've gotten told that whole thing about mining the soil and all of that. 00:18:15 They think they're going to lose everything that they've built up in the bank for the last 30 years. 00:18:20 You know how hard it is, though, to not feel that way sometimes? When you've been trained by your father and grandfather to do X. 00:18:27 You feel that you're taking a big risk. Right. I really don't think we've heard this the whole time about mining the soil. I don't think we mine the soil. 00:18:34 I don't either. I think it gets thrown out of balance. And then we talk about how many pounds it takes to raise this crop, and all of these pounds we're putting in the soil, and I don't think it's 00:18:43 understood at all how many of those pounds of that dry fertility gets tied up. Heath Huizinga in southeast Illinois, 00:18:51 he came in through XtremeAg. Because of XtremeAg, I'm proud of this, he quit putting on dry fertilizer, and he went to 100% liquid diet with Nature's. 00:18:58 Mm. Because he's like, "I'm just not seeing a return." And when we look at the sap analysis and things like that, and then we're always told, well, the plant prefers 00:19:05 root uptake. And it does. But when I'm going out with the liquid diet and I'm feeding foliar, it takes so much less nutrition than it 00:19:13 does to just balance the soil and feed that. So, like in my corn crop now, we're putting on nitrogen, and then we're coming back with that sap test and we're supplementing the plant. It's less expensive. 00:19:23 There's no deficiencies for soil applied versus foliar applied. There's none. That's for sure. 00:19:28 And I've argued with that for years, that it won't work, liquid won't work. And I had an agronomist tell me something that turned a light on. 00:19:36 He said, "I don't care how many parts per million you have in your soil of any of these nutrients. I care how many parts per million's in that plant." 00:19:45 Exactly. Right. It has nothing to do with the soil. Right. Quit worrying about your soil. Worry about the plant and what the plant needs. 00:19:50 Ding. Yep. That's the light comes on. Yep. Maybe the liquid deal will work. And I know there's deficiencies. 00:19:55 And Chad's proof. Yes. Chad's went how many years without putting on dry, and the soil test never changes. Yep. Hey, a question, though. You brought this up, and I like the topic. 00:20:04 There's the Middle East thing, and I said, "It's not just Middle East, not just Iran." I think it's everything. I think it's a 00:20:09 combination of the oversupply of commodities, the prices where they are, and then also the supply and pricing of the inputs, inputs being particularly fertilizer and fuel. 00:20:21 And you and I, both of us don't see this really getting better anytime that soon. So, the big adjustment, you can talk about fertilizer a lot. 00:20:28 I think fuel is one of those deals. What the hell are you supposed to do? Not drive across the field? Well, there's recreational tillage. 00:20:34 There's some un- You know? And that's more of a problem I see among older- That's funny 00:20:39 ... older farmer, or young guys that they've got to prove that they're doing something. And then there's the other one. 00:20:45 You farm 160 acres of beautiful black dirt that is owned by a 93-year-old widow, and by God, Elmer went out there and plowed behind the 00:20:53 combine every year, and if I'm renting to this 40-year-old man, he's supposed to be plowing. He must be lazy. And so they go out and plow grudgingly because they're 00:20:59 like, "Oh, well- And it's not as pretty when it's no-till. "Edna wants me to do this, so I do it to keep the land." But I think that we 00:21:05 could cut back on diesel from what I see. But you talk about those delivery companies that started doing things, changing their drivers' routes so that they weren't making left turns, right? 00:21:16 Because they shaved 5% of... I don't know that it's as easy for a farmer to do that, but I'm sure that a farm could probably 00:21:24 use 5% less diesel in a year. I don't know exactly how to do that. How do they do that? 00:21:29 Five percent less, you're going to have to- Cut diesel, you cut tillage. Well, and it's another thing with the new administration, they're saying that 00:21:35 they're going to pull the DEF off. The DEF will increase fuel mileage if you want to use fuel mileage. 00:21:39 Yeah. Right. So, the thing that makes your diesel exhaust fluid actually makes the machine less efficient- 00:21:45 Right ... in the interest of- A lot efficient worse ... environmental. Now, that may take 10 years to get that done. 00:21:49 I talked to some of the Deere people, and they said it will be in stages. It won't be like next year. 00:21:54 What about electric? Does it help electric? All of a sudden, is this going to be the shot in the arm that somehow electric 00:22:01 farm machinery? They can't. Because they ain't there. The batteries are too heavy. So, I was at a meeting where they were talking about electric tractors, and the capabilities are there, 00:22:11 but the weight that it puts on the machine, and to build big enough batteries to run all day is not feasible. 00:22:18 And also the technology's just not there. Right. And then biodiesel. Well, we'd be all for that because we're farmers. It's priced at the same as diesel. 00:22:26 Yeah. It's not like it's being sold for $2 a gallon when regular diesel is $5.40. Well, but no- 00:22:30 It's not ... there is some things, there's some lemonade in the lemons. Correct me if I'm wrong, higher fuel prices should be higher corn. 00:22:37 Mm-hmm. The higher the fuel price is less polyester is used, so cotton's going to go up. You've seen cotton make a big rise. Todd and I were talking about that earlier. 00:22:45 I sold last year's crop, he held. Who was the smartest one? By far, Todd was because he held. He didn't know we was going to go in this war, he didn't know diesel was going to 00:22:53 go up. But he made the right decision- Yeah ... because polyester and all the oils are going up. So there is some offsets to this. Maybe we're losing 30% on our 00:23:02 nitrogen, which is 10% of our budget, but if corn goes up 85 cents, 00:23:08 it'll offset that. Yeah. Right. So it doesn't make you any more profitable, but at least keeps... One rises with the other. 00:23:14 I think a farmer anymore, correct me if I'm wrong, if they could just break even and make their equity payments, 00:23:20 they're good to go. I'd sign up for that for five years. What I've been through the last two or three years, if you just told me I'd break 00:23:25 even, wouldn't make any money, I can make- Rick, you going to make your land payments? Make my land payments. I'll sign a contract to that. 00:23:30 And we just discussed this, that unfortunately, I put it on social media, Matt, that at some point these farmers probably should admit that farming is a land asset 00:23:42 buying and holding business that is propped up by the farm, which is about break even. 00:23:50 Right. It's like the McDonald's thing. Oh yeah, well, you know what? We'll just own the real estate. You keep selling the cheeseburgers. 00:23:55 It's kind of what it looks like. Lost leader. So anyway- Farmer may be the lost leader of the land. 00:23:59 Land management's what you're saying, right? Right. Well, it's obviously different for the people that are in the thing. The people that bought it 40 years ago are 10X on their land. 00:24:07 Oh, yeah. So, what do you think? When you ask that question, I think that these guys are going to have no choice, to be honest. You can throw some bailout out there. 00:24:15 You can say we're going to make it easier on your machines by getting rid of the DEF. 00:24:20 The survivor that's at least breaking even making his land payment is going to have to look at absolutely, 00:24:28 are you cutting back on fertilizer or fuel? The answer is yes I think it's coming. 00:24:34 Because I would've never dreamed that the amount of people we've had come to us this year wanting us to help them with a total liquid diet. 00:24:41 Mm. I would've never thought that. But why? High phosphate is what drove it, and now if you look at what nitrogen's doing, which it's not going down anytime soon, 00:24:54 I would think that that would follow as well. But the last thing, there's always reports on Rural Radio and all this different ag media I meet, that you and you are going to make big changes to your 00:25:04 cropping mix because of specifically, it takes more diesel to put out cotton than corn. It takes more diesel to put out corn than soy and all that. 00:25:12 You're going to make switches based on that, or you're going to make switches based on fertility. Did it happen? I don't really think that it- 00:25:17 In all honesty, fuel's not that big a percentage. Okay. What about fertilizer? For fuel per acre. 00:25:22 Yeah. But again, with all the purchasing the ferti- Yeah. I'll make some changes because of fertilizer. 00:25:27 I don't really make any changes because of fuel. So what kind of changes are you making on fertilizer? You're going to put, it takes more to- 00:25:33 We've already cut down. We're cutting, we're- What are you about to get radical? Is that what- We're about to get radical on some nitrogen. 00:25:39 On corn? Yep. You're still going to produce corn, and then the- Yes 00:25:42 ... decision becomes, "Hell, what if we put zero nitrogen out?" And 00:25:48 We made our first sale on July 27, winter wheat. Now, we did that because of the wheat market. And now we also have about 400 acres of oats in to harvest- 00:25:58 Mm ... for the oat plant we invested in, and to bale. So we did that ultimately because corn wasn't making a lot of money, and let's go in this other direction. But it's not lost on me that the 850 00:26:09 acres of wheat and oats I have is a far less expensive fertility plan than corn. Yeah. So- 00:26:14 It's not lost on me, but it wasn't a big part of the decision But what you've got to be careful of, and I know I'm the naysayer a lot, 00:26:20 is you can save yourself out of business. So, and I use the term knee-jerk. So if you get a guy that's maybe, which I'm one of them, 00:26:28 that is struggling financially, just to keep your head above water, and then you start knee-jerking making decisions, "Well, fuel's too high. 00:26:35 I'm just not going to use any nitrogen," or, "I'm just not going to till at all. I'm not going to spray these weeds." Weeds take over your crop. 00:26:40 Ugh. You know. You still have to do a good job. You've got to stick with solid agronomy. That's number one. Whether it's less fertilizer, liquid diet- 00:26:48 Yeah ... whatever you're doing, solid agronomy. And then from there, you start, we call it tweaking. Yeah. 00:26:53 You tweak your operation based on solid agronomy. Well, I saw something on social media, Matt, and it made me think about you guys, because a non-ag person, when I was talking about lack of profitability on an acre, 00:27:02 growing stuff that's in vast oversupply with the cost now of the inputs like fertilizer, et cetera, and some person that's a well-intentioned person, 00:27:09 suburbanite that doesn't know ag said, "Well, why would you even bother farming it at all?" I said, "Well, fixed costs." What they teach you in economics 00:27:17 401 or whatever is, at some point, you've got to handle this fixed cost. That factory still is a $10 million 00:27:24 capital expenditure, and so we've got to run something through there, and those acres are still 00:27:29 300 to $350 an acre cash rent maybe around here. That's where there's... Maybe doing oats on it is neat, but 00:27:39 can you make enough money on a cheap crop like that on your $400 ground? Well, that's part of the reason we invested in the oat plant. 00:27:46 As an investor in there, the oats that we harvest will be delivered at $7. Yeah. 00:27:50 So that's a lot of money for oats. And then, like we have talked about, we quit raising alfalfa. We quit raising that stuff 00:27:58 and make baling our own feed for the cows because it was just a lot more fun and a lot more profitable to raise $6 corn. 00:28:03 But we don't have $6- Yeah, right ... well, we don't have $6 corn anymore, and we don't have the cost of inputs of that corn, so it's a double problem there. 00:28:10 So now we've gone back to raising our feed for the cattle, and then that land is expensed through the cattle operation instead of the row crop. 00:28:16 So can we make money raising 4.50 oats? No. But the plan we have, it is a profitable plan. Well, back to the solid agronomy, and I did this. 00:28:24 It was a knee-jerk situation. I said, "Well, corn's 4.50, 4.30," whatever it was, two years ago. So I took my corn acres down to 800 acres, from 00:28:33 5,500 to 800. Mm. The following year, I lost 200 pounds of cotton, and I lost 10 bushels of soybeans. 00:28:40 Because the rotation wasn't there. Because the rotation of the corn back on that- The benefit, by the way, the person watching, the benefit of the rotation is- 00:28:45 The benefit of the corn rotation- Following corn, your next year's crop gives you better yield, and so you missed out on a bump on the rotation. 00:28:53 You just can't forget that with corn. Yeah, it's cool to grow corn, especially if you're from an iState, but growing corn on corn all the time's not good either. 00:29:02 No. We lose some bushels there. That's where I say solid agronomy, figure out what your best rotation is and stick with that. A lot of times, even if you might lose money on corn this year, 00:29:12 what you gain on soybeans or cotton the following year may offset that plus more. 00:29:16 One of the things, when you posed this question as a topic, and I said, "That's a hell of a topic," there's a little bit of 00:29:23 concern. Is a supply chain shock, basically is what you're talking about, going to make these guys better at what they do? At some point, though, you can't 00:29:33 get much better. At some point, the cost of the input has to come down, or the cost of the other has to go out. 00:29:39 At some point, you can only shave so much. At some point, you're right, we can't get any better. But I'm telling you- 00:29:44 We're not there ... I think we're barely scratching the potential. We're barely scratching the potential of what's possible. 00:29:48 But it takes pioneers like you- Like us ... to go try that and be radical. Right. 00:29:54 Do things in a radical way. I think it's neat to shake up your kids. I think it's good you shake up your kids. Those little b******s, they need to be shook up a little bit. 00:29:58 Well, we get ridiculed a lot for some of the crazy stuff we do. But we're not doing that just to benefit ourselves. 00:30:03 We're doing that to benefit agriculture- Yeah ... and see if it'll work. So remember, there's a bell curve here. 00:30:08 Because you only have 5 to 10% that's early adopters and innovative. What's the other 85 or 90%? They're still slinging fertilizer. 00:30:18 Well, they've got that easier 30-pound loss- Yep ... for the 300-pound man that you gave the analogy of. This is time for them to do that. Anyway, and we hope you do. 00:30:29 We're not in any way insulting your weight. We're just saying that you've probably got some easy cutting to do, and now's the time to do so. Whether it's the Strait of Hormuz, the situation with China, 00:30:37 the next COVID, if you live long enough, you see this continual shock of supply, price, et cetera. Here we are. 00:30:44 Matt Miles from Arkansas, joined by Kelly Garrett, XtremeAg guys from Iowa, joined by our friend and sponsor, Tommy Roach, 00:30:52 with Nature's. Very first sponsor- From Texas ... of The Granary show. We've never forgotten that. Texas Tommy. 00:30:58 Yes. Texas Tommy, as we call him. Texas Tommy. Anyway, if you want to learn more about their lineup of products that can help you spoon feed your crops, go to natures.com. 00:31:07 That's N-A-C-H-U-R-S, natures.com. Till next time, thank you very much for being here. Share this with somebody that can benefit from it, and thank you very much for 00:31:13 joining us at The Granary. Cheers. You sure it's not Texas Tech Tommy? Texas Tech Tommy. 00:31:17 Yes. Oh, I might get my shirt on this one. Yep. You're a little, what is that? Yeah, I've seen you with the shirt on. 00:31:21 Yeah. I've seen that in the last year. And Lindsay said that it was a schmedium because it was two types. Schmedium. 00:31:28.308 --> 00:31:28.768