News

Managing risk in a more expensive and volatile farm economy

A commodity broker says one of the first questions farmers ask him is when land prices will decline.

Jody Lawrence, president of Strategic Trading Advisors, says it won’t happen anytime soon. “We thought for a while it would be high-interest rates, we’re here right now and the price isn’t going down,” he says. “We thought it would be lower corn prices, we’ve certainly seen a couple of variations of that over the past six months and that hasn’t made any land sell for cheaper that I’ve heard of.”

He tells Brownfield productivity matters.  “As the yields continue to get higher and higher, even if it’s only a bushel a year, that adds revenue to that acre,” he says. “And if you look at it as a business investment, it’s just like the rent on a house going up because there are more people looking for it.”

As farming gets more expensive and the markets remain volatile, Lawrence says producers should think about risk management.  He says that starts with finding their break-evens.  “People argue with me about break-evens and go ‘well, I don’t know because I don’t know what my crops going to yield’,” he says. “Well, you have to start somewhere, so start with your APH.  Or start with your insured yield, whichever.  if you take revenue-based insurance, whether it’s 75, 80, 85.”

Brownfield interviewed Lawrence at the 2023 Helena Innovation Expo in Memphis, Tennessee.

AUDIO: Jody Lawrence, Strategic Trading Advisors