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… An interview with Dr. Wayne D. Purcell on products that make the farm business a more profitable entity.
Intertape Polymer Group’s Woven Fabrics Division recently interviewed alumni and distinguished professor at Virginia Tech, Dr. Wayne D. Purcell, in order to explain his efforts to determine what can make farming more profitable and how the Nova-Thene® HayMaster System™ fits into that plan. Nova-Thene® HayMaster™ is a coated, woven fabric made from polyethylene that covers round or square bales of hay right where it is grown and cut. Designed to increase profits, improve quality and eliminate waste, this coated, woven fabric allows air to penetrate, but not moisture, wind or sun, the most damaging factors to dry hay. Covering haystacks at a cost of as little as $2 per ton can show impressive returns of up to $75 per ton. The following is an interview with Dr. Purcell.
Q
Dr. Purcell, if farming is a labor of love, why hasn’t it always been profitable?
DWP
It seems like a simple question, but the answer is complicated. I could probably fill two textbooks and four semesters of class work on the subject. Plain speaking, farming is an industry. Many large farms have integrated business into a daily activity. The multitude of small, independent farmers often need a business-like approach and farming alone doesn’t let farmers work like a business – which must be profitable to survive.
The return on investment in farming is often negative and farmers get by on annual government subsidies and by their land value inflating for development purposes. Producing homogenous commodity products, they have no pricing power and have to take whatever the market dictates. Temporary price increases generate investment to expand production then prices drop. I call this the “micro-macro trap” and encourage my students to look behind temporary price increases to see if there is demand growth or enough cost-reducing technology to give longer-term profits a chance
The fact is that a 1% increase in supply usually prompts a 2% or so decrease in price if demand is constant; not shifting up or down. Modest-sized farms usually produce hay in support of some other enterprise, but those other enterprises (horses, beef and dairy cattle) face the same problems in trying to insure profitability. For example, beef cattle inventory dropped from 132-million head in 1975 to 95-million head in the 1990s, all caused by producer losses that spanned the period
Finally, on this question, total farm receipts usually drop when the crop or production is larger and since total operating costs are always higher with a large crop, profits are devastated and the farmers lose money. But, it’s still a labor of love.
Q
We all know businessmen who believe in the old saying: “Love is love, but business is a pleasure” and their credo demands that they make a profit in order to survive. Why can’t profit (as well as the labor of love) be a motivator for the farm to survive?
DWP
All farmers want to be profitable … it is simply impossible for many, especially smaller farmers, who face the low-priced-commodity product situation described above. Trying to move alternatives to escape the cost-price-problems have seldom worked. So, they are skeptical people.
Q
Businessmen also agree that they must grow and expand to perpetuate their business, so they plan how to do it. Can’t farmers make a plan to help assure profitability?
DWP
Yes, and that is much of what we teach, but how does a plan overcome low prices that result from over-production over which the individual farmer has no control? In business, it is easier to manage “marginal costs” not to exceed “marginal revenues”. The operating environment of the farm is different than the regular business-planning environment. I think they’d welcome profit-generating ideas such as the Nova-Thene® HayMaster System™ for hay covering.
Q
Is it difficult for the farmer to see the value of spending a few dollars-per-ton of hay to be either more profitable or have his future survival more assured?
DWP
I think the better managers in farming can understand that. They are used to whole-farm planning and partial budgeting and some will even recognize marginal analysis, which looks at the added benefit, the marginal receipts from their production, against the added cost. I think that all you need to do is an exceptional job of convincing them of the benefits in terms of reduced losses and improved result ratios.
Q
We’re told that more than 50 million acres are planted nationally with hay. Some areas report waste of as little as 10% and as high as 50% due to weather problems. Couldn’t the farmers plant other products if they grew hay with a zero waste factor?
DWP
Yes, if it made sense in terms of profitability. They could plant other farm products or commit the un-needed acreage to other uses of profitable value … more livestock … a farm store on the highway … housing. Yes, if it is possible to do so that returns are greater than cost, saved acreage that contributes something to the farmer’s bottom line of profits would be of interest.
Q
Test have shown that a minimum of 9% improvement develops in nutrient value for the cattle. Doesn’t that mean improved milk yield, and/or better beef quality?
DWP
Added nutrients may not impress anyone toward higher milk yields or better beef quality. High-priced concentrates have helped increase daily milk production and daily gains in feedlots, which are already double what they used to be 15 to 20 years ago. What improved nutrients might do is reduce the cost and usage of high-priced concentrates in the ration. As you said in an earlier question, reducing costs can be a profit contributor. If better hay reduces ration costs, as Yogi Berra says, “…that’s cash, which is as good as real money.”
Q
From a pure dollar improvement standpoint, actual hay covering in the western states has yielded $30 to $70 per ton higher prices for dry alfalfa against the cost of a few dollars per ton for proper covering. All these savings translate into a possible farm profit contribution. Isn’t that reason enough to promote the covering of hay?
DWP
This is a “farm-level” decision. It’s no different than the decision to put equipment under shelter, or reduce losses in grain storage by installing higher-priced silos, etc. The farmers in my area went to big, round bales and accepted losses in exchange for the lower labor costs in making, handling and feeding hay. Now you have to convince them to care about losing part of the big bales … it will take numbers, research results, marginal analysis and maybe new outlays from operating capital. But, if your studies prove the results, many will listen and heed the advice.
Q
If indeed waste is rampant in hay farming, couldn’t even a modest reduction in waste of, say 20%, be a decent value to the farmer instead of growing something else? (…housing, warehousing, manufacturing, rental income as a farm subsidy or a bigger herd of livestock.)
DWP
First of all, a 20% reduction in waste on big, round bales doesn’t mean very much in dollars saved in hay. What you do with the land that isn’t required for a zero-waste production of hay is another matter. Added value to the farm income is more marginal revenue, with controlled marginal cost that is part of the risk/reward ratio formula that businessmen use. More than anything, this added-value potential can take the farmer down the business-planning path and keep farming as a labor of love that can have a better chance of being profitable. But, that requires that any additional enterprise has a positive profit potential, and they are not always easy to find.
Q
Dr. Purcell, can you think of any investigative projects that the Advisory Council could work on to help persuade the farmers to use the Nova-Thene® HayMaster System™?
DWP
Whoever reads this interview might call you with some connections on the following ideas: Try to get aligned with some farm management specialists at land-grant universities in various states. Solicit their help in contacting and working with state forage producer associations, dairy associations, beef-producing associations, etc. It will help you and the farm industry to see material developed which demonstrates researched-backed results that prove the benefit of the Nova-Thene® HayMaster System™. Extension Specialists at universities have credibility with the people whose behavior you want to change. They can help you find graduate research assistants who could work on projects of the type that would benefit both your company and the farming industry. Any marginal cost that your company invests could have profound benefits to the farmers’ bottom line as a result of his believing that he should adopt the Nova-Thene® Haymaster System™, which is what you want to accomplish.
Q
Dr. Purcell, you have been very forthright and open in sharing your views on this subject. We at the Intertape Polymer Woven Group are very grateful. As you know, we have a large manufacturing facility located in Danville, Virginia and our Danville family of employees will be most appreciative of your help. Thanks for talking with us.
Since 1981, Intertape Polymer Group Inc., a publicly owned company, has strategically grown to support operations in 21 facilities with approximately 2,600 employees. Intertape develops and manufactures a broad range of packaging products that reflect the needs of our customers. These include one of the largest offerings of tapes available: pressure-sensitive and water-activated carton sealing, cloth duct, double-coated, masking, HVAC, electrical/electronic, filament and high-performance specialty tapes. Intertape also produces a wide variety of shrink film, stretch film, carton sealing and shrink packaging equipment, woven coated fabrics and flexible intermediate bulk containers.
For more information, please contact:
Dohn Berger, Nova-Thene® HayMaster™ Marketing Manager
Phone: 1-972-576-9470
dberger@itape.com
FOR IMMEDIATE RELEASE
Contact: Dave Atkinson
Corporate Communications Director
Intertape Polymer Group Inc.
941-727-5788
datkinso@itape.com
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