1 > Plan for gross dollars per acre (or per head) Only about 25 percent of farmers know their true breakeven price, Russell says. “Calculate your breakeven, but don’t focus on that number. Instead, focus on covering all your obligations, on an operator draw for living expenses and on a profi t. If you don’t write down that goal, how will you achieve it? “Profi t should be viewed as a cost — the cost of staying in business and capitalizing growth. In well over 90 percent of the plans we see, there is an opportunity to reach profi t goals at some point during the year,” he says. 2 Manage machinery cost per acre “Farmers often think of machinery costs as the total price paid or monthly payments. In reality, you need to account for depreciation, repairs, interest and opportunity costs,” says Russell. “Machinery costs vary widely. To manage those costs, know the total fi gure.” SET A TARGET PRICE THAT COVERS: Corn Belt equipment costs range from $43 to $295 per acre. Source: CHS Hedging data • All projected operating expenses • Term debt payments, including principal and interest payments on real estate, equipment, facilities and vehicles • Depreciation (to allocate funds for replacing equipment) • Operator draw for one year • Profit EQUIPMENT USED IN CROP PRODUCTION NUMBER OF ACRES MACHINERY COST PER ACRE 25% OF MARKET VALUE OF ÷ = The Russell Legacy Growing up in eastern Iowa, Moe Russell watched his family struggle to decide when to market grain. A 26-year career with Farm Credit Services opened his eyes to farmers’ need for commodity marketing guidance paired with trusted fi nancial advice. In 1998, he co-founded Russell Consulting Group with Terry Jones, a Williamsburg, Iowa, farmer. The group became known for detailed analysis and a strong model of risk discovery, planning and management. CHS Hedging began a formal relationship with Russell Consulting Group in 2007 and continues to follow that proven methodology when consulting with crop and livestock producers through its farm marketing and fi nancial program, which has one of the most extensive benchmarking databases in North America. Russell recently stepped down from his management role, but continues to work as an associate alongside 23 other advisors. “We act as CFOs for many of our clients,” he says. “All farmers have dream lists. We can help them decide where it makes sense to spend their money. It’s rewarding to help farmers grow their businesses for future generations.” 14 SUMMER 2019 CHSINC.COM