Beware: Insufficient Financial Analysis and Misinformation Could Spell Trouble for Farmers' Finances

Of the various winter tasks that await, the most important task is also perhaps the least favorite of vegetable growers: financial analysis.

The chief differences between a profitable operation and a not-so-profitable operation are often rather minute, but it takes a little number crunching in the winter to ensure that the return on your investment was maximized for the past growing season. While cost containment seems second nature to most growers, there are times when growers fall for a sales pitch and leave all rational thought behind when it comes to making a purchase.

Good, reputable companies utilize Land Grant Institutions like Penn State University to carry out replicated research on their various research farms to ensure their products' efficacy, timing, and safety on the various crops and cropping systems grown in the state. Companies that are often less reputable in the marketplace tend to rely on "anecdotal" information, and they rarely engage in unbiased research to support their claims about their products and/or their product lines.

Fertilizer is a commodity, but to some companies, it is their major profit center. When it comes to fertilizer sales, it is like the Wild West, with few rules and limited accountability. Nitrogen costs can be as little as $.38 a pound, yet growers are paying $58 or more for a pound.

When you think of cost containment as a grower, how many 30-pound boxes of tomatoes do you need to sell to cover your fertilizer costs? When you are paying $.75 a pound for 100 pounds of nitrogen per acre, your nitrogen costs are $75.00 an acre, which may be the cost of 2 to 2.5 boxes of tomatoes. For the grower that bought into the magical properties of a $58 a pound nitrogen product, the same 100 pounds of nitrogen per acre costs the grower $5,800. When a farmer spends $5,800 an acre for nitrogen, they will need to sell over 190 boxes of tomatoes to cover their nitrogen costs.

When I challenged one grower several years ago on his nitrogen fertilizer selection, he told me that he opted in for the $58 a-pound nitrogen product because it was organic (he was not certified organic) and that the sales representative and the company's literature assured him that he could eliminate the use of fungicides to prevent diseases in his tomato crop. Several weeks later, the grower contacted me for a visit to look at his tomato crop, and his field was essentially wiped out from late blight.

This experienced grower unfortunately fell for the sales pitch. When the grower contacted the fertilizer sales representative after the late blight hit, the sales representative linked the late blight outbreak to the grower's past usage of protectant fungicides on his tomato crop from the previous seasons. The sales representative told the grower that the past fungicide usage in these fields had eliminated all beneficial microbes, allowing the late blight organism to flourish. Initially convinced by this sales representative's less-than-fact-filled argument, the grower decided that the best course of action was to purchase more "microbially" enhanced fertilizers to broadcast over his farm acreage so he could ward off late blight and other fungal pathogens in the future.

Fortunately for the grower, and before completing the sale and taking delivery of these new fertilizers from this company, this grower decided to see if his next-door neighbor was also dealing with late blight. When he hopped the fence to track down his neighbor, he saw a beautiful tomato field free of disease just 1,000 yards away from his blighted tomato crop. When he found his neighbor in the sweet corn field, he asked him how he avoided "late blight"? With no hesitancy in his voice, this grower told his neighbor that he follows the Mid-Atlantic Commercial Vegetable Guide closely and that he adheres to a strict spray schedule using recommended fungicides at the prescribed time intervals. He also described that he soil tests yearly and follows the fertility guidelines published in the commercial vegetable guide.

As they talked more in the cornfield, the grower without late blight told his neighbor that they both sat in on the same sales pitch from the fertilizer representative who was visiting their valley. He stated that while many growers bought into the fertilizer program, he reasoned that if fertilizer were going to prevent diseases like late blight, every company would clammer at his doorway to make a sale. He also reasoned that buying into a sales pitch with no supporting data was foolhardy at best.

When you look closely at this real-life occurrence, you see that the farmer with late blight never looked at his nitrogen costs or what he was paying per pound for nitrogen. He also bought into anecdotal data that was not based on fact or unbiased replicated research. When that growing season ended, this grower lost his entire tomato crop and never recovered any of the money that he had invested in fertilizers, transplants, labor, or other crop inputs. While he ultimately was able to put this mistake behind him, it required him to seek off-farm carpentry work to help his family get through the winter.

There are hundreds of products that are being sold on the marketplace that make fantastic claims about their ability to increase yields, improve crop quality, and essentially make you more money. Before betting on these products, please research these claims before purchasing and using them on your farm. If you want to test a new product on your farm, conduct a small trial first before deploying it over the entire farm.