It’s a cloudy and cool day in southern Indiana, and the work in the shop continues.  Both combines will be in there today, getting the engine oil changed, and a close inspection of all the moving parts.  The headers are ready, and the trucks are serviced, too.  John and Philip have been busy as bees getting the machines and trucks prepared.  We hear reports of neighbors commencing with their combines, and we think we will give it a try on Monday.

Yesterday, we met with our accountant to do some very preliminary year-end tax planning.  With his input, we made a determination about some first-year depreciation and seed and fertilizer expenses that can occur before November 30, when our fiscal year ends.  We also set a strategy for grain sales for that period.  It is very helpful to have a mental picture of what needs to happen financially between now and then.

Today, in a 9am meeting with Greg Anthis, our crop adviser from CPS, Wheatland, Indiana, we were able to figure out some projections for our fertilizer costs for 2012.  This information is a key ingredient our our crop budget process.  We have an in-house crop budget spreadsheet system to anaylze our total costs of production for corn, soybeans, and wheat.  I have been working this afternoon on that 2012 crop budget.  In that document, we make our best estimate of every line item of cost, from seed and fertilizers, to wages and capital expenditures for machines and conservation.  Every item of expense is carefully defined, and refined, and then the spreadsheet calculates our per-bushel costs.  This number gives us great confidence in marketing our crops, for it lets us know exactly what we must receive in order to secure a profit.

I also began today a preliminary draft of our 2012 cash flow, noting the timing of every expense and income item for the next year.  Although these are estimates, they are fairly accurate, with some expertise developed by our experience over the last 30-some years.  This cash flow also adds to our confidence in making the farm’s financial decisions.

If you have been reading this website for several days (September 1), you know we have been considering buying another new tractor for next year.  Well, the numbers confirmed that decision today, and we have completed that negotiation!  There will be a new John Deere 9360R arrive here next June!  (Can you imagine it takes that long to get a new tractor?)

-Dennis