In the News

Precision Decisions

Matt Mayer has a brain trust and he uses it to guide important decisions for the 7,000 acres he manages. He calls it his personal network, and it's comprised of growers and industry professionals he grew to respect over five years as a seed company district manager, plus another five years “in retail.”

Mayer is general manager of MGP Farms, a corporation of five farming ventures near Spencer, IA. “I'm big into farm records,” he says. “Every time you cross a field, you can gather at least five layers of data. You can then query, for example, which phosphorus level is the highest yielding. Looking at data this way makes it easier to decide things like whether you need new equipment or different labor practices.”

Mayer and his business partner share the same vision of where agriculture is headed, and have combined their families' farms into MGP. Together, the enterprises are 60% corn and 40% soybeans, and are integrated vertically to include livestock to capture profits in the value chain. One-fifth of MGP's 2007-2008 grain production was fed to related beef and hog enterprises.

They are managed separately so that Mayer can focus on grain marketing. “With high input prices, you have to be the best marketer you can be,” Mayer says. “That's where the profits are, not saving a nickel on glyphosate. My focus is who will bid the highest for our grain. Last year, it was ethanol; we have four plants within 60 miles of us here. Now the livestock offer better marketing alternatives for our grain.”

Mayer uses a spreadsheet for price discovery of the highest value of MGP's grain. He sets both target marketing dates and prices to discipline his marketing plan.

“I've arrived at that way of thinking from my network,” he explains. “I begin by calculating our breakeven costs. From there, I lock in our magic numbers for how profitable we want to be. If the magic number for corn is $4.15, for example, we sell a certain amount at that price, and then another percent at the next preset benchmark. A year ago, I sold at $4.05 and thought I was on top of the world. Later, of course, I wanted those bushels back.”

MAYER'S BUSINESS PARTNER is from his hometown but now lives in Chicago. They own their land, so that expense is locked in. They look at several what-if weather and market scenarios. “What if the market crashes but input prices remain high?” was one of them.

Besides former business colleagues and customers, Mayer's network includes growers from Iowa LEAD (a leadership program), Iowa Farm Bureau and Iowa Corn Growers Association. He also considers his chemical rep to be a sounding board, explaining, “He's one of the smartest people I've ever met.

“My network spans the Corn Belt; it's an amazing resource,” he says. “It gives me the opportunity to talk to many growers in similar circumstances about their seeding rates, tillage practices, recordkeeping; you name it. Sometimes they lead to additional contacts with specific expertise in a given area.

Decisions guided by Mayer's brain trust include the best way to apportion equipment costs across acres, specialty crops worth looking into and the economics of various tillage practices. “Our discussions lead us from one subject to another and improve all of us,” Mayer says.

Another example of a recent decision that illustrates Mayer's thought process was the building of a new 640,000-bu. grain storage complex over the past two years. “We wanted to control our product and be able to deal with the end users and capture premiums for dedicated products,” Mayer says. “We want to be able to segregate product for feed mills, ethanol and hogs; soybean parent seed vs. food-grade soybeans. When steel prices jumped, we accelerated our original construction timetable from a 10-year plan to a five-year plan.”

Other moves that have grown from Mayer's sounding board include adapting auto-steer for tillage and planting operations, eliminating most of MGP's disking, a return to preplant herbicide and applying their own 28% nitrogen (N) solutions.

“Also, I'm huge into records, “says Mayer, elaborating upon how he makes decisions. “The more information I have on each farm, the better the decisions. Our farm records show the profit and loss of each bushel on each farm. They're broken down by each type of cost - equipment, labor, chemicals, etc. He uses FarmWorks Trac, Funds, Site software with a Titan monitor and Site Mate VRA in the planter tractor.

These tools help him to scrutinize costs and yields by soil type, tillage practices, N sources, planting populations and soil pH levels. “As a result, I'm analyzing the profitability of variable-rate planting and N application by soil type,” Mayer says. He projects a P&L to evaluate prospective new technologies.

One easy conclusion from Mayer's data analysis was the payback for tiling. Yield data has confirmed 10-12% yield increases where he tiled four years ago, “almost to the line,” Mayer says. The returns are higher still on poorly drained soils.

ANOTHER ILLUSTRATION OF data's role in driving Mayer's decisions lies in managing energy costs. “The information I collect allows me to figure profitability of each farm,” he says. “Trucking costs have become a real issue. So I use our database to identify them and tell whether I need to search for new markets to reduce our trucking costs. That may mean hauling directly to the closest grain purchaser, which could change seed decisions (shorter day maturing hybrids/varieties). And it may drive a decision to deliver No. 2 yellow corn without having to dry it first. It saves on trucking, drying costs and shrink from drying corn in town.”

Variable-rate planting is another area where Mayer has gathered data to guide his decisions on buying a variable-rate planter. “I hadn't been a big believer in the concept until I mistakenly planted 40 acres at 40,000 and was surprised by the results,” he says. “I'd watch the yield monitor across the soil types and see 35-bu. increases, wondering whether they were from the soil type or the hybrid.”

Mayer's data is a treasure trove to him, and he listens attentively to what it tells him.

“My belief is that if I can control as many of the variables as possible and let Mother Nature do the rest, it'll pay off,” he says.