Issue link: http://read.uberflip.com/i/14183
UNITED STAND by Buzz Shahan, UPGA Chief Operating Office From Ogre to Friend The dastardly trend line yield OGRES CAN BE ANNOYING. NO ONE likes them and no one wants to be around them. Due to superior farm management practices, growers have created an ogre of major proportion and of major influence in their economic life. It is one they cannot escape no matter what they do. It is an ogre who, when left to his own devices, wreaks market havoc for both fresh growers and process growers. It is the trend line yield of potatoes. What is trend line yield? Trend line yield is the anticipated yield of a crop predicted by its historical performance over several decades. Mathematically expressed, the trend line yield for potatoes has an R² factor of .9797. For those unfamiliar with probability curves, an R² of .9797 roughly means that there is a 98 percent chance that a trend will repeat according to its historical record. This probability is so high that it almost ceases being probability, becoming certainty instead. The trend line yield for potatoes indicates that on average, growers in the United States and Canada will produce an additional 400 pounds of potatoes per acre every year. In other words, spread across total North American potato acres, growers in the United States and Canada will produce 5.3 million more hundredweight of potatoes every year even with acreage remaining constant. Does an unwanted overburden of 5.3 million cwt of potatoes affect price? What effect does this overburden have on process contract negotiations? As shrinking markets force a grower to shrink acreage, rotations automatically lengthen, marginal ground is skipped over, end guns are turned off and each acre receives greater management intensity. Only the best storages are utilized. Do these maneuvers portend anything but better yields and better quality? A 98 percent chance of repeating is a pretty high chance of occurrence. Wouldn’t it be nice if the ogre could be turned into a friend? Here’s the formula for forcing the switch: When yields go up and inputs remain constant, per unit cost drops. This is good. It means that a grower can grow fewer acres and make the same amount of profit. Lower per-unit cost also means a smaller budget and a smaller credit line. Hasn’t this been the goal all along, to reduce risk? So what’s the bottom line? The bottom line is exactly what it says it is. The last line at the bottom of the page explains everything a grower has accomplished in a given year. It explains whether you won or lost. Did you reduce acres and risk because you can now produce more on each acre and profit from it? Or, did you feed the ogre and are now puzzled why the market is bad? PG 28 Potato Grower | AUGUST 2010