Phantom yield loss: what are you leaving in the corn field?

Narrator: And it all comes down to this.

John

Maxwell: Two on, two out, bottom of the ninth.

Narrator: The Farmers lead by one. Full count, here comes the play at the plate, and it's the Ag View Pitch!

Chris: Welcome everybody to another episode of the Ag View Pitch, and today we're going to have an interesting conversation on phantom yield loss, and our guests are John Maxwell and Ben Blair, and they farm in central Iowa. And so, uh, John and Ben, why don't you each go ahead real quick and introduce yourselves, and we'll kind of get into the topic here.

John

Maxwell: Good morning, Chris. This is John Maxwell. We farm, like you said, in central Iowa, uh, mostly corn, some soybeans, but mostly corn, some livestock as well. But I've been part of the operation for Been here for 5 generations now.

Chris: So nice.

Narrator: And I'm Ben Blair. I've worked with John here at his farm for 7, 8 years now. I kind of, I fill the integrator role here. A lot of what I do is ROI, cash flow analysis, and business planning.

Chris: So one thing I'll give you kudos for on Ben is that every farm operation needs an integrator and You said a key word there, and I've had the, the opportunity to get to see you guys in action. And Ben, you do a great job of tracking and analyzing information. And so let's get right into the topic of the phantom yield loss. One of the things that we hear a lot is, you know, growers will be out harvesting corn early, and maybe they go do some beans, move to another field or whatever, but they come back to that same spot And it's just really strange, all of a sudden the yield is lower than what they remembered right next to the pass where they quit. And so that's one of the things that, you know, sometimes we get questions on, you know, how is it justifiable to dry and, and, you know, how much can we be spending on, on harvesting wetter corn and that type of thing.

So what I want to do, Ben, is start with you and have you kind of talk a little bit about how you guys got into the concept of actually doing some calculations, some measurements on the quote-unquote phantom yield loss and what you discovered there. So I'll be quiet for a minute, Ben, and let you kind of dive into that for us.

Narrator: Yeah, sure. And it was probably— this would have been 4 or 5 years ago. And what we set out to do, we kind of— we had an unsubstantiated belief, you know, kind of farmer mentality that You know, corn yields better when it's wetter. So, you know, we started trying to put numbers to that. And like anybody else, probably the first thing I did is, you know, I went to Google and I typed in Phantom Yield Boss research. I think it's important to kind of define that. You know, when you start doing that, there is a lot of university research out there under Phantom Yield Boss, but what they are trying to prove or disprove is the loss of dry matter from drying in the field. So you've got to look at the process that's used there, you know. So they're pulling ears off plants at different moisture levels, they're hand shelling it, they're drying it down, they're weighing it out.

Um, you know, and you'll find anything from no loss to 4% loss in university research per point. And, you know, we, we kind of realized that wasn't really applicable to what we're talking about at the operational level. And so what we did is exactly what you had just mentioned. We went through, you know, several, probably 4 or 5 years of historical data, and we found instances where we did exactly that. We pulled into a field, we were combining, you know, for whatever reason, whether it was going to cut beans or it was weather-related, we had to leave, come back, and, you know, we saw that yield drag in the drier corn. So we did side-by-side field trials and we collected maybe 12 data points. And, uh, you know, it really started to paint a picture and started to, you know, prove that kind of farmer belief.

Chris: So, okay. And, uh, talk a little bit about, um, how you did that process and how you— what would the math look like to make it statistically accurate, let's say?

Narrator: Okay, and essentially what we did, I've got one printed out in front of me here from— this was— we do a couple every year just to check and reconfirm. So this is one from last year, and this would be a case where, you know, we came in, we started combining, the average moisture was 19%, and it was averaging 216. Uh, came back later, it was at, let's say, 16.4, and it's averaging 206. Essentially what we did was we took a moisture difference, a yield difference, and then we kind of standardized that back to a percent loss per point of field drying. Like I said, we started out with a sample of maybe 12 samples. We threw out the top and bottom as outliers just to try to tighten that up a little bit, and we did our calculation from there. Since then, you know, we've been adding about 2 a year. Just from throughout the year.

When I see that happen, I make a note and I go back and check it later on.

Chris: Have you guys ever seen any difference with, um, certain hybrids, with say earlier hybrids versus full season hybrids and more of a spread? Because you talked about, you know, the university data saying maybe a 0 to a 4% difference. You know, a 4% difference on 200 bushel corn, I mean, you're talking 8 bushel. It's pretty significant. Any, any certain conditions that give you a higher percentage of loss than, than something else?

Narrator: Honestly, I haven't been able to see, pin down a trend. You know, I've seen it on, on both sides, so I can't with confidence give you a good answer on that.

Chris: So have you seen no difference, or have you always seen some level of difference?

Narrator: I've only seen some level of difference. It has varied, you know, that, that standard deviation isn't very large though. You know, when we were doing it, say our initial, our initial research, we came up with a 2.2% loss, and I would say that bracketed from 1.6 to probably 3, somewhere in that area.

Chris: Okay. And then offline, John and Ben, you guys were talking about, you know, your drying cost being, you know, can't exactly remember exactly how you put this, but basically like 4 cents of drying. Talk a little bit about the drying question that you gave me offline.

Narrator: Okay, and, and I— that's kind of the bottom line of this. And for a little bit of reference, uh, as I mentioned a second ago, you know, our research has shown a 2.2% loss per point of field drying. Now within our own operation, I guess being the skeptical farmers that we are, we actually use 1.1% when we're doing cash flow analysis or actually using it for calculations. And that's strictly just be super conservative about it. But what, what we were talking about before, before we got on the call here was the bottom line on it. So say you use 1.1% loss per point of field drying. If you had 200 bushels per acre corn and you're selling it at $4, the breakeven for drying that, you could spend 4.5 cents and break even on drying that corn per point. Yep. And so, you know, you look at that, and Chris, I had asked you, you know, what's your average drying cost per point?

I think you said in that 2.8 to maybe 3 cent range, right?

John

Maxwell: Yep.

Chris: Yeah, and that's, and that's just it. I mean, and then That leads me to another question though. So, uh, the last couple of years we've harvested some pretty wet corn in our own operation, um, because of just needing to get started. And then last year things just didn't seem to ever dry down. And so that was a frustrating thing on one, one side, but on the other side, you know, we we probably were doing better than we thought, I guess. You know, we were probably getting more, more bushels in than what we suspected, I would guess. Is that kind of your thought?

Narrator: Yeah, and it is. I mean, that's, that's why we look at things like this, right? Because it is painful seeing that LP and electric bill and you're just burning corn, burning corn, you know. And, and this does, this does kind of justify that, I guess. I think it's important to look at, you know, exactly like you were saying, we had to get the corn out. Or, you know, in a better year too, I mean, you want to be as efficient as possible with harvest. You want to get out there timely, you want to maximize, you know, use on that piece of equipment. And to do that, you're going to have to pick wet corn. So I'm not saying that phantom yield loss or harvest loss is necessarily a You know, it isn't a cash flow mechanic. It's not something you're trying to make money doing, but it justifies that operational efficiency, if that makes sense.

Chris: Yeah, it does. And then I think, and I just from talking to clients across the Corn Belt, I think many of us will plant or tend to plant fuller season hybrids for our specific areas because there tends to be more yield advantage in a given area on a fuller season hybrid versus an earlier season hybrid. And I think this just helps to justify that decision process of, yeah, let's, let's plant the fuller season hybrids, go for the yield, and plan on doing some drying. And that drying really is not going to be an economic impact on the bottom line as much as maybe we think it is when we write a check out for the LP, like you said, or write a check out for the electric bill or whatever, you know. Adding bushels.

Like I've always said in the past, you know, the more bushels you can bring in, you know, that's probably the fastest way to lower your cost of production is just increasing the amount of bushels that, that you do have in inventory. So, um, I guess— yeah, go ahead, Ben.

Narrator: No, I'm just, I'm just going to say that is, that is an excellent point. And, you know, using that is almost a justification to be more aggressive with hybrid selection and you know, when you get in the field, that timing. I mean, that's, that's exactly what, what we use it for.

Chris: Yeah, the other one, other advantage I guess that I, I hear from a few people too is just, you know, we are starting 2021 this year. So we're, we're having this recording this in 2020, but you know, we are— when you get done harvesting, the, the next thing is to be getting that field ready whether it's fertility or strip-till or tillage or whatever it is that you do to be ready for the next year. That was really a penalty, I think, going or coming out of a year like 2019 when things were so delayed and, and harvest was really delayed. I think has a lot to do with, you know, maybe not getting quite as good a yield the next year if you don't have the field conditions the way you want them going into a new year too. So I guess I see that as a big part of the equation too.

John, um, any comments from you, you know, the— as the quote-unquote farmer, any, any words of wisdom for the listeners out here, um, things that you've learned or things that you would recommend other farmers think about doing when they consider this type of a topic?

John

Maxwell: Well, I definitely wouldn't say any words of wisdom, but Things that I, that I've noticed, Ben already touched on, you know, we've— I grew up drying corn. I watched my grandpa do it, my dad do it. We've done it. We've— in my lifetime, we've owned 4 or 5 dryers. So at some point, you know, you question that. You question it just about every year. You know, last year you made a good point. It's frustrating drying corn with how wet it is. I will note that there is a happy medium there. My personal target is 27% to get started, 27, 28%. And I would love to be done before that corn hits 22. And then a lot of instances we'll leave those beans sit. And unless we're able to or something happens, but it typically pays in our operation year after year to get that corn out Now last year, you know, to say that you can harvest 35% corn better than 27%, for example, that doesn't work.

And similar to what Ben was saying about harvest loss versus phantom yield loss, that's going the opposite direction. Mathematically it works, but it really doesn't because there's too much damage to the corn that wet. Or last year we had some corn that was planted so late that it didn't even black layer before it frosted. You know, you're harvesting 48, 49, 50-pound corn that is super hard to harvest, and then you're putting that stuff through a dryer that you're trying to take 20 points out of. It's just— it was not ideal. So there's a lot of things in there that, you know, fluctuate on the upside of moisture and the downside of moisture. So like I said, 27— 22% to 27%, that's the range that I like to be in. And that's years and years and years of data on our farm.

This year, for example, we have over the acres we've done so far, we're at 180, which is about 30 bushel off conservative from normal. Majority of that's drought related. Some of it wind damage, but we really haven't gotten into wind damage stuff yet. I am extremely confident that if we'd wait until that corn is 15% in the field, that number would be more like 150. Now I do understand the argument of insurance in a year like this. And but me personally, I plant the corn, I take care of it all year. We tend to it, we fertilize for it. I lose sleep over it. I check it every year. I'm going to harvest it. So, and I'm going to get what we can get. That's what it is. And that's what we do every year. So that's the mentality that we, my family's gone through forever is you plant the corn and you go get it while you got it. Don't wait for it to snow.

Don't wait for the wind to blow and then complain later. You didn't get your corn out, you know. We've harvested beans on Thanksgiving before and the ground's frozen. 70 bushel beans. Yeah, they may have been 75, 76, 77 maybe in October. But do the math on that versus years like that, 240 bushel corn. We've got our data to show it and that's what we go by. So.

Chris: Those are all really good comments. I guess one other thing to echo what you said, John, and get your take on it, but you know, for the listeners, probably you made a comment of 180 bushel corn right now, and if you waited for it to get down to 15%, you'd probably be harvesting 150 bushel corn. That's a pretty significant loss, but you know, when you start considering stock quality because of the drought that you had, you start considering you know, the, the roots and, and the wind damage even in that you had, and even in the areas where it wasn't as bad as some of the areas, you still do have some issues there. And, and that whenever you have drought-stressed corn, um, the, the significant loss potential is just enhanced that much more too. And I think you guys are in that situation. And so not only is, is there an advantage to you know, picking it above 22% for you guys.

But it's, you know, it's just the ease of harvest and the efficiency of that too, because all it takes is a, is a fall windstorm where the wind, you know, doesn't always blow as hard in the fall, but sometimes you get those days where the wind blows 40 miles an hour all day long and it starts laying things down and it really makes things not so much fun at that point too. So I'm with you 100%. Any, any other comments, any questions that I'm not asking to either John or Ben, either one of you, that are things that you think that we should touch on that we didn't yet touch on?

John

Maxwell: Uh, no, I don't think so. For me, it, you know, a lot of it is the joy of doing, you know, harvesting corn and morale and having the family around and involved in the operation, things like that. And a lot of that plays into the weather. And, you know, it just, you reminds me, I think it was last year, maybe 2 years ago, a guy that works with us asked me why we're starting a field, a new field at 8 o'clock at night. And my comment to him was, because I'm in a t-shirt. Yeah. And when you're harvesting 200 to 260 corn, morale's good for the guys that own the operation and have passion in it. And the guys that work there and work with you, work side by side with you, they're also happy because they're in a t-shirt.. And when late season like last year, when moves, you know, everything gets affected that certain way. And I like to pick that happy medium.

And I think there's, you know, for livestock end of it, there might be a few acres for us, we're even looking at going at a 100-day corn in this area, harvesting at the end of August or even sooner, harvesting it wet and getting something out there for the livestock, you know. For grazing, or, you know, there's so many different things you can use to your advantage when you're equipped and have done the research and believe in it. And some people might believe in it. There's a— you know, you're like this, we're the only people around. I guarantee everybody thinks we're crazy. They say something every year, but that's fine. Um, we're happy doing it. So that's all that matters on our end.

Chris: Well, it's amazing when you do the math and, you know, just what something looks like And there's always one thing I always have noticed is there's perception on any financial topic and then there's reality. And a lot of times perception does not match what the reality of it is if you sit down and actually calculate the, the scenario, which you guys have done, which I sincerely appreciate this conversation today because I've watched you guys, I've seen your numbers, I've watched how you guys analyze things and you do an excellent job of making sure that that the data you put together is meaningful and it's accurate. And, uh, and so that's really good. Ben, any final comments from you or anything I didn't ask you?

Narrator: Um, you know, kind of, kind of the last thing for me would be, you know, when you step back and look at the big picture of this, um, you know, John, for example, he's going to own the dryer. So you can look at this a couple different ways, but say you're a 2,500-acre farmer You buy a new dryer, it makes you more efficiency, more efficient. Say you increase your average harvest moisture by 4%. At $4 corn, that's $50,000 a year. So you can look at that as cash flow on the dryer. You could also look at that as, I mean, $50,000 is another employee on your farm, another family you're supporting, which I know is important to John. So, um, yeah, I don't know. I think step back, look at the big picture, use that number and You know, it starts to make some sense.

Chris: Awesome. And I really like the math analysis from you, Ben, and John, your comments on the family being able to be there, I think rings a bell with everybody, with all of us. Harvest is a special time. It's a difficult time for, you know, kind of where you guys are at. Right near the derecho and a bunch of your ground in the middle of that derecho. And everybody feels for you guys and, and hope you have a safe harvest and things continue to go well. If anybody wants to get a hold of you guys, would you be willing to— Ben, would you be willing to throw your phone number out there if anybody has a question on kind of how you've gone through some of the math? Or do you have an email that people could send you an email for if if they have any questions.

Narrator: Yeah, definitely. And I've also, I do have, a while ago I did a PowerPoint presentation on this. So I do have a PDF kind of breaking down some of our findings and how we use that number. I'd be happy to send out to whoever. But yeah, if you guys like to, if anyone wants to get ahold of John or I, have any questions, emails, John is just John, J-O-H-N, @maxegg, M-A-X-E-G-G. @ag.us, and mine is just ben@maptech.us.

Chris: Awesome. Hey guys, this is a great conversation. John and Ben, really appreciate your time. Thanks a lot.

Narrator: Thanks for having us, Chris.

John

Maxwell: Appreciate you.

Chris: Yeah, thank you very much, and thanks everybody for listening, and we will catch you next time on the Ag View Pitch.