While most no-till farmers report being profitable in 2015, most are also planning to reduce spending during the 2016 growing season in an attempt to stay that way. In all likelihood, equipment purchases will take the biggest hit as no-tillers plan to cut back on overall spending in the year ahead.
The results of No-Till Farmer’s 8th annual No-Till Operational Benchmark Survey indicate that 67% of the 385 no-till farmers who participated in the poll were profitable last year. This compares with 81% who said they were profitable in the year prior. The percentage of no-tillers who reported losing money in 2015 vs. 2014 was up by 5%, with 16% of respondents finishing the year in the red. Those reporting a flat bottom line more than doubled in the last year to 17% of all survey participants.
The current downturn in the ag economy showed up in the growers’ net income with an average net profit per farm at $43,289 — down 40.7% ($29,722) from the $73,011 realized in 2014.
The full survey results appear in the May 2016 issue of No-Till Farmer’s Conservation Tillage Guide, a sister publication of Ag Equipment Intelligence.
Last year, no-tillers estimated they spent an average $452,912 per farm, a little less than the $455,981 spent in 2014. However, this number includes the amount no-tillers are spending on both principle and interest for their loans, while in previous years only interest was tracked. Including the principle brought their overall farm expenditures up by $45,639 from 2014 levels. Excluding the loan amounts from both years, no-tillers spent significantly less in 2015 than in 2014, for an average savings of $48,708. That equates to an average of $342.96 per acre spent last year compared to the previous year’s $380.15 per acre.
If the no-tillers’ estimates for spending in 2016 are on target, they will reduce their overall costs by about 6.5%, from $452,912 in 2015 to a total of $423,486 for the current growing season. For equipment, no-tillers expect to trim spending by 17% in the coming year.
In a separate online poll on planned cutbacks in 2016 conducted by No-Till Farmer between Feb. 16 and March 15, 64% of 275 growers said they were planning to cut back on equipment purchases this year. Next on the list was reducing fertilizer, with 39% of no-tillers planning to cut back, and seed and seed treatments, as 36% of the growers say they’ll decrease spending in this area.
No-Till Farmer readers also predict year-over-year reductions in 2016 for lime and soil conditioners by 23.6%, fuel by 12.5%, fertilizer by 8.8%, machinery and service parts by 7.3%, land rent by 5.7% and seed/seed treatments by 5.1%. All other expenses will see cuts of 2% or less.
Typically, readers who participate in the No-Till Operational Benchmark Survey tend to be conservative in how much they predict they’ll spend for the upcoming growing season. But in 2015, no-tillers stayed under their estimated budget overall (when excluding loan payments), especially with big-ticket expenses like equipment, fertilizer, seed/seed treatments and pesticides.
Unless market conditions change, it’s more likely they will stay within their budgets for the 2016 growing season.