Sunday, November 13, 2011

When and What Contracts

I think conventional wisdom is that the industry might have learned last year to come with contracts a bit earlier. The big question is what kind of contracts will they come with?

It is not our job to tell a farmer what to do but I want to be sure he has all his options. Because many farmers don't look at this blog I hope you will tell your neighbors to gather information as much as possible. The Peanut Commission is a good place to get that information. We have funded work through the National Center for Peanut Competitiveness and they have a host of representative farms which can be a guide to use to compare cotton and corn and peanuts, in terms of cost of producing versus price.

It has been my observation that the first price offered has never been the best price offered. There are also other considerations that must be weighed as you make your planting and marketing decisions.

Weather forecasters have said this Winter and Spring will be a continuation of the current weather pattern and will be warmer and drier than normal.

Look around and you can see the ponds are very low and streams are far from being out of the banks. Reports are that the aquifer is lower than normal after two years of heavy pumping with less than adequate recharge in the Winter.

Reports from the Southwest are not any better, in fact they may possibly be even worse.

If we don't recharge and get water to use for irrigation then another dry year could be a disaster. This said it is a consideration but I don't think it is sound to make all your decisions on what ifs.

So then how does an acre of peanuts stack up on cost versus return and other considerations?
Corn, for instance may reduce a farmer's risk because the growing season is shorter and by August it is harvested and in storage.

These are just a few considerations and we will be looking at more of these at the Peanut Commission as we progress toward Spring.