Taking ownership of your passion. - Infiniti USA: High Performance
Taking Ownership of Sustainable Farm PracticesDick Wittman 2014 Direct Seed & Oilseed Cropping...
Transcript of Taking Ownership of Sustainable Farm PracticesDick Wittman 2014 Direct Seed & Oilseed Cropping...
Dick Wittman
2014 Direct Seed & Oilseed
Cropping Systems Conference
Taking Ownership of
Sustainable Farm Practices–
Can’t Sit On Our Laurels
Agenda
Overview of our farm operation
PNDSA journey from inception to today Our Mission & Vision
How DS has enhanced economic viability and environmental sustainability
Challenges ahead
Wittman Farms - Overview
Diversified grain, cattle, timber, and wildlife – farming in Nez Perce & Lewis Co
Elevation range – 1,200 to 4,300 feet
In “transition process” for 34 years
Family in transition
Farming practices in transition
Experimenting with NoTill/Direct Seeding since early 1980’s
Crop diversity designed to match
diverse soils, elevations
Wheat – soft white winter/spring; hard red
winter/spring; hard white spring; durum
Barley – feed barley; malt barley
Pulses – peas, lentils, chickpeas/garbanzos
Oilseeds – canola/rapeseed; mustard; safflower,
linola/flax
Perennial Seed Crops – grass seed
Hay – alfalfa and grass
Typical Rotation: WW, SW, Pulse, WW, Oilseed
Baby Steps Experimented with numerous drills and techniques
Haybuster, Palouse Zero Till, AgPro, JD, IH SDX
Tried trash cleaners, narrow & wide row spacing, etc.
Strategic alliances, equipment trades with neighbors
Lengthened and diversified rotations…critical step!
Transitioned GRADUALLY
Old way: plowing chisel/disking in early 1980’s
Early ‘90s three pass system: chisel Quad5 pre-
plant fertilize double disk “Great Pains” drill
By 1999 100% DS: one pass system – 4 products;
heavy harrow or Schulte mower to manage residue
2008 DS Conference -
Dick Wittman
6
Technology and
Precision Farming Path
Sprayer Transitions Combine sprayer with DickeyJohn computer – early 1980s
Air sprayers since 1992; 2007 - GVM 90’ Trident boom
Today: guidance, autoboom, autosteer standard on all units
Harvest Data - Field Mapping since 2003
New Flexicoil 5000 Hoe Drill/3450 Cart – 2006 4 products – seed, dry starter; NH3 & P/S
Exactrix system for improved accuracy of placement
Autosteer, variable rate fertilizer application
New JD 1895 Disk Drill – 2012 Diversified our drill types
Variable Rate capable – fertilizer and seed inputs
Look how far we have come…
2008 DS Conference -
Dick Wittman
8
Mounted Exactrix 2KC Mass Flow NH3 System
on Flexicoil 5000 45’ tool with 3450 Cart
Spring 2006 – Total Investment $37,600
2008 DS Conference -
Dick Wittman
9
Mounted 750g NH3
bottle on rear of tank.
2” fill line required to feed
Exactrix pump
Liquid solution pump
mounted under NH3 tank
4 products run with
Legacy 6000 (Midtech)
controller
Non-Traditional Succession
Arrangements 10
Old Guard 33’ Flexicoil
33’ 9” spacing Hoe
Newest drill
45’ Flexicoil 12” spacing Hoe
HOW PNDSA HELPED
GET US HERE
STEEP evolution, PNDSA creation, Deliverables
Let’s take a trip down
memory lane
Birth of PNDSA
Evaluation session with STEEP
Advisory Committee - 1997
Call for leadership to make direct
seeding/NoTill work
Need entity to coordinate research
priorities in PNW related to conservation
STEEP team rose to the challenge!
1st DS Conferences - 1997-99
Brought in world class speakers
Pasco - 800 attendees
Momentum continued-Spokane,
Pendleton
Pendleton Beer Fest… “time to get
serious”
Message: “…if you build it, they will
come”
Organizational Process
Pullman Symposium – Dwayne Beck,
Jim Cook
1st Steering Committee - “12 Apostles”
PNDSA mission, vision and plan of
action created
PNDSA
Commodity
Groups
Washington Idaho Oregon
Educational
Institutions
Chem/Fert/Equip
Companies
Environmental
Groups
Public Agencies
Conservation
Organizations
Partners
STEEP III
Policymakers
Global Based
Conservation
Tillage Groups
Collaborators
… through research
coordination, funding,
and information
exchange.
Promoting economically viable
and environmentally sustainable
direct seed cropping systems…
Energy
Companies
Pacific Northwest Direct Seed Association
PNDSA Focus Areas –
Our Deliverables
Information Transfer
Policy Development
Research Coordination
Funding Support & Membership
Education/Outreach
Website – information exchange medium
Newsletter – monthly highlights, partner featuring, educational content
Quality of Life Brochures – key reference to promote Direct Seed Benefits
Videos – Direct Seed, Other Topics
Critical Info X-Chg Tools
Annual Direct Seed Conferences
Local Breakfast Groups great peer group education vehicle
Now replicated many locations in PNW
Thank You–Dave Barton, Dennis Roe, Hans Kok
Field Tours & Demonstration Projects Cunningham & Kambitsch Research Farms
Grower field tours special tours for USDA policymakers, environmental groups, media
Policy Formulation - Highlights
Advisory Roles – EQIP, Local Working groups,
state NRCS Technical Advisory Committees
Conservation Standards – major input at state &
national levels
CSP implementation –
key influence in design of program
Growers now collecting “dividends” of PNDSA input
Crop Insurance –
significant engagement in adapting
Challenges: managing abuse in dryland areas; keeping
RMA honest as cropping systems evolve
Policy Hot Button – Climate
Change
Why PNDSA drug into this fight?
Poster children for “sustainable farmers”
International debate on “regulating” vs
“incentivising” sustainable farming
Cupid sought us ought… EDF
Opportunities for DS innovators
Education about soil health
Monetary incentives to improve soil
Climate Concerns Increasing temperatures; lower
humidity
Forests burning up
Declining fisheries
Ecosystem not sustainable without major changes
Carbon Contract-1st dividend
30,000 tons of CO2 for $75,000
Entergy of Louisiana Contracted with PNDSA
77 growers committed to DS for 10 years
First payments to Growers mailed on 12-9-02
Entergy also got credit for Emission Reductions
(ERUs) derived from DS practices
Research Focus
PNW voice for “systems” based
conservation research
Input/direction to regional and national
research programs –
STEEP, Land Grants research programs
Commodity and private industry efforts
(See results posted on www.directseed.org)
Delivering on a Promise …
Is Direct Seeding more
economically sustainable?
Pioneers - Management Accounting Standards
Clearwater Direct Seeders
RME Grant (’02-03) Test Drive:
30 growers info exchange
group following similar practices
Goals:
Learn MA concepts/benefits
Design MA system to fit how
business is managed
Identify cost of production
Build benchmarking model
Optimize strategic decisions
We learn by doing.
Expected OUTCOMES – Direct Seeding
Reduced operating costs
Increased operating margins
Improved environmental quality
Improved capital asset use efficiency—less capital required per acre
Ultimate Target: Higher ROE
Key Questions: 1. Can we measure impact of strategic decisions? 2. Are we making progress?
Be careful how you draw conclusions
Operating Plan- “What We Do”
Strategic Plan “How we do it”
Production
Marketing Financing
Capital Plan
Growth
Succession Planning
Value- Added
Strategic Alliances
Tillage System
Diversification
Crop Rotation
Business Structure
Environmental Stewardship
WF Version-Mike Boehlje Strategic Thinking Model
Vision
Long Range Objectives
Short-term Goals
Action Plans KRAs
Evaluate
Budget
Mission Quality of Life
Technology Adoption
Numerous Strategic Shifts
Genetics
In-source
Out-source
Cost of production
Less trips over the ground means less money spent on fuel
and equipment…and more profit
Not counting gains from increases in soil productivity
Operation Cost/Acre
Fall Plow $11.00
Spring Harrow 3.50
Spring Cultivate 5.00
Cultivate/Spray Incorporate 5.00
2nd Incorporation-Cultivator 5.00
Seed-Conventional Drill 10.00
Harrow 3.50
Roller/Packer 3.00
Total Costs Per Acre $45.50
Operation Cost/Acre
Fall Heavy Harrow $4.00
Fall Roundup-Green Bridge 7.00
Custom Hire-Direct Seed Drill 17.00
Harrow 3.00
Roller/Packer 3.00
Total Costs Per Acre $35.50
Other Qualitative Factors: less water
loss, less compaction, less erosion risk
Profit Center - Managerial Report FormatTotal $ $/Acre $/Bushel
1 Commodity Revenue
2 Production Costs-Direct
Seed
Fertilizer
Chemicals
Crop Insurance
3 Production Costs-Indirect
Fuel
Repairs
Depreciation-Equipment
Gains/Losses on Equipment Sales
Custom Hire
Hired Labor and Benefits
Rent/Lease payments
Supplies
Utilities
4 Total Dir & Ind Production Costs
5 Production Margin (Line 1-4)
Sales, General & Administrative Expense
Storage
Marketing Costs
Freight
Management Labor & Benefits
Liability Insurance
Office Expense & Professional Services
6 Total Sales, General & Admin Exp
Other Expenses & Income
Finance Expense
Operating Interest
Term & R.E. Interest
Govt Payments-non commodity linked
Losses (Gains) on R.E. Sales
7 Other Expenses (Income)
8 Total Oth Expenses & Income
9 Total Costs ( Line 4+6+7)
10 Operating Margin (Line 1 - 8)
Step 1 Re-think how we organize data Standardized Profit Center format to organize data
Recommended by Farm Financial Standards Council
1996-98 1999 2000 2001
Direct Production Costs $93.03 $82.21 $98.88 $107.84
$1.29 $1.14 $1.11 $1.20
Indirect Production Costs $92.74 $85.12 $97.48 $96.78
$1.28 $1.18 $1.10 $1.08
Sales, General & Admin Costs $39.61 $21.83 $30.84 $25.42
$0.54 $0.30 $0.35 $0.28
Finance Costs $15.93 $10.12 $9.06 $6.36
$0.22 $0.14 $0.10 $0.07
Total Costs $241.31 $199.28 $236.26 $236.40
$3.31 $2.77 $2.65 $2.63
Yield (bu/acre) 73.6 72.0 88.1 90.0
Total Costs dropped $.68/bu –21%
Production Costs dropped $.29/bu – 12%
SG & A Costs dropped $.26/bu – 48%
Finance Costs dropped $.15/bu – 68%
SIMPLIFIED DU PONT FINANCIAL ANALYSIS MODEL
Developed by Ag Education & Consulting
multiplied by
Return on average
farm equity
-7.8%
Spread betw een ROA
and Interest cost
-7.2%
Average debt/equity
ratio
1.15
Return on average
farm assets
0.5%
multiplied
byplus
Average cost of
liabilities
7.6%
minus
Average debt/equity
ratio
Average farm
liabilities
$1,062,576
divided by
Operating profit
margin
1.6%
Average farm assets
$1,983,454
Gross revenues divided into
$576,068$9,386
Net farm income from
operations (NFIFO) +
Interest - Withdraw als
Average farm equity
Return on average
farm assets
0.5%
1.15
$920,878
Average asset
turnover
29.0%
divided by
Operating
Margin
ROE
Asset
Turnover
Debt/
Equity
Every strategic decision impacts financial performance…
A Tale of Two Tillage Systems
Conventional Direct Seed / NT
ATR .50 : 1 1.05 : 1
OPM 12.8% 16.3%
ROA 6.47% 17.14%
ROE 3.88%
Which set of strategies is more likely to survive?
22.61%
Cost Sharing/Value Added $
Played Key Roles
Cost sharing tools
EQIP, conservation district funding
Low interest rate loan programs
Value Added Premiums from DS
Food Alliance certification
Monetizing value of carbon sequestration
through carbon credits
Shepherds Grain – Food Alliance
Value added premiums
for wheat sourced under
DS cropping system
Food Alliance certified
Certification Costs
S. T. Periodic Audits
$.60/bu premium 1,200
ac wheat @80 bu/ac =
$72,000 bonus
Process Improvement-
Wittman Consulting 2013
39
40
Benefits of Direct Seeding
Improved economic and
environmental sustainability:
Sequesters CO2 .5T/acre/yr
Organic matter – surface layer
Improved air & water quality
Improved wildlife habitat
Lower fossil fuel use
↓ 3.5gal/acre per USDA
Increases economic viability
This slide says it all!
Challenges Ahead…
Information X-Change & Outreach
Research
Policy
Technology Support
Administrative Leadership
Challenges ahead…
Information X-chg & Outreach
Great strides newsletters, conferences,
tours, breakfast groups, etc.
Are we engaging:
“non-traditional” partners, consumers,
environmental groups
policymakers back east?
New farm bill, conservation titles, CSP, etc.
Challenges ahead…
Research
Soil Quality changes
Can we prove soil quality is better?
Organic matter, compaction, soil pH
REACCH project
are you plugged in?
lessons for direct seeders?
Where does animal ag fit in DS system?
Do we need vertical tillage or not?
Is this improving soil quality?
Can oilseeds & cover crops fix compaction?
… or do we just miss “recreational tillage”?
Challenges ahead…
Research (cont’d)
Variety research adapted to DS systems
Expanding Precision Ag beyond NH3
How apply VRA to seed rates, other inputs
Adapting soil tests to DS soil environment
Cover Crops – not if, but how?
Proven cropping systems practice elsewhere
How adapt to PNW micro-climates?
Do we need different Soil Test approach?
Challenges ahead…
Policy
Definition of “sustainable” up for grabs
Are we at the table helping to define and measure this?
Walmart – Sustainability Index…How do we score?
Universal Principles of Conservation Agriculture
World Congress of Conservation Agriculture
permanent soil cover
direct seeding
planting with minimum soil disturbance
multi-annual crop rotation
integrated nutrient and pest management
biodiversity on the landscape
Carbon Trading Overview
©Wittman Consulting
2008
46
Challenges ahead…
Climate Change Policy Debate
Battle not over
Are we “passing bar bill to our grandkids”?
Engage on legislative and regulatory fronts
Support education and lobbying efforts of
commodity and conservation groups
Study resources on Carbon Issues
Working group www.agcarbonmarkets.com
Challenges ahead…
Conservation Program Policy
Who speaks for us at state & nat’l level
Conservation Standards, Farm Bill-conservation
title, CRP, CSP, etc.
Networking with other US & Int’l NT org’s
CASA Group – Karen Scanlon, CTIC
Mandak, NT on the Plains, Chesapeake Grp
Internat’l Conservation Congress – CA ’14
Your voice needs to be heard in DC!
Challenges ahead…
Economic Viability
Not done with “economic proof”
Lots of data on cost efficiency
Need updated conclusions to backup DS claims
Commodity market decline presents new
opportunity to expand DS
Renewed interest on understanding cost of
production
PNDSA needs to dust off Management Accounting
lessons & strategies for survival
2006 2005 2004
Drovers Journal Dec 2006
Original Cost = $60k + $90k
Replacmt Cost=$300+$250k
$1.08 $1.44
$1.89 $2.09
$2.47
$3.63
$1.84
$2.58
$3.24 $3.55
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
Pri
ce/G
al
Year
Diesel Price Trends
$0.18 $0.21 $0.26 $0.25
$0.29
0.45
$0.60
$0.21
$0.46 $0.47 $0.51
$0.03$0.06$0.09$0.12$0.15$0.18$0.21$0.24$0.27$0.30$0.33$0.36$0.39$0.42$0.45$0.48$0.51$0.54$0.57$0.60$0.63
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
NH3 Fertilizer - Price/ # N
Aug ‘13
$121.46
Challenges ahead…
Economics (cont’d)
Certification program – great potential
Need to expand access to PNW
Not “bureaucracy”…valuable by-product of
Process Improvement efforts
Cover Crops
Need “cropping system” budgets and simulations
showing affects of putting these into rotations
What is projected economic benefit?
Crop Insurance implications?
Challenges ahead…
Technology
“Technology support train” needs to catch up with
“equipment sales train”
Issues
Compatibility/Portability between systems
In-field operations – trouble shooting
Devoting company resources to grower training and support
Integrated Management Information System
Can we ever get to the Holy Grail?
Agronomy planning work order execution recording &
analyzing financial/accounting
Challenges ahead…
Administrative Leadership
Kudos to re-establishing
“Administrative home” with competent
executive director who shares
passions of membership
Active board
Great opportunity to serve industry
Tremendous personal growth opportunity
WANTED!!! NEW BLOOD!!!!
Food for Thought…
Have we completed our mission?
Parallel with ACTS/ARTI & FarmTech
– Alberta Conservation Tillage Society
& Alberta Reduced Tillage Initiative
ARTI & ACTS gone…but FarmTech
Cropping Systems Conference viable
as ever.
“Systems” is where the puck is going!
Summary
Looking back…lots of be proud of
Owe BIG thanks to board, Kay, and industry
supporters who put train back on the tracks
Can’t rest on our laurels…lots to do
Information exchange
Research
Policy Development
Funding & Membership Support
Thank You – PNDSA for getting us HERE and
for keeping the vision alive!