Webster's definition of entrepreneur is "one who organizes a business undertaking, assuming the risk for the sake of the profit." With this definition, Webster also describes a farmer.
Farming is a business. I think we would all agree it is an essential profession from which all of us reap the benefits, often three times a day. Farmers undertake numerous risks with the hope and faith of making a profit. They are making decisions year-round that will determine their profits (if any) at the end of the year.
A Peoria County farmer just stopped by my office as I was writing this, and we had a 10- to 15-minute discussion on the recent growing season, as well as the decisions he made this past year—or will need to make going forward. What are some of those decisions?
As a farmer, you must analyze the market to help justify your decisions in whether to plant corn or soybeans. My discussion with this particular farmer focused on the large corn crop that had just been harvested and hence, the depression of corn prices. Local grain elevators have thousands of bushels stockpiled outside because their bins have been filled to capacity.
Five years ago, corn was the most profitable crop, but the tide has swayed to where soybeans are now more profitable. Farmers will adjust to market demands, and if the free market system wants more soybeans, farmers will respond by planting more soybeans. They have indeed already switched acreage the past couple of years, and in 2017—for the first time in history—soybeans accounted for the largest amount of harvested acreage in the country. 2018 will likely follow this trend if corn prices continue to hover around the $3/bushel mark, with soybeans at $9+/bushel.
Another corn-related question that surfaced: What will happen with the Renewable Fuel Standard? The RFS is the guideline Congress established to determine the volume of ethanol made from farm commodities such as corn. Currently, about one third of each year's corn crop (five billion bushels) is used to produce ethanol fuel. Twenty years ago, corn used for ethanol was only 500 million bushels—or 10 percent of what is being used today. As corn yields continue to increase, the farm community continues to push for higher ethanol consumption. Who knows how low corn prices would be without the RFS?
Farmers not only strive to harvest excellent yields of corn and soybeans; they also need to focus on when to sell the crops that were produced. They can sell their grain in the fall, at harvest, to the local country elevator at the price being offered; they can store the grain and hope for prices to increase during the winter or the following spring and summer; or they can sell their crops before harvest begins at a price established earlier in the growing season. In addition, there are many grain marketing tools a farmer can use to help lessen the risk of price swings: including hedging, options, futures, basis, and crop insurance programs.
Outside of determining which crop to plant and when to market these crops, farmers are inundated with other decisions to make. They must determine when soil and weather conditions are right for planting; which weed control program to use; which fertilizer program to use; how much and what type of tillage should be done prior to planting; whether a pest control program is warranted; and the list goes on. Hundreds of articles have been written about each of these topics. Farmers are the ultimate entrepreneurs in our society. They relish the free entrepreneur lifestyle and prefer to keep it that way. iBi