The Hancock-Henderson Quill, Inc.

The Wisdom Of Barnyard Bruke: Grasshoppers in a Chickenhours

Greetings to Readers of The Quill,

As a follow up to last weeks article on Monsanto's CEO Hugh Grants description of his companies "sustained windfall," it was pointed out how his compensation from the company was packaged in 2007.

His salary is reported in the April 14 issue of the Wall Street Journal at $1,133,800.

Annual incentives were reported at $2,975,000 with total compensation for 2007 at $10,455,700 and total realized LTI (sum of stock option gains, restricted stock value at vesting and long term incentive pay-outs in 2007 representing awards that have been granted over time) at $19,075,300.

Some might think he received enough money in 2007 to burn a wet mule (that takes a lot of money).

Cornelius Farkwad says, "if'n you threw him in th' river, he'd cum' up with a fish in his mouth (he is very lucky).

As for the producer, his income might not fare as well, as he moves forward. In examining how his expenses have changed, one can find these generalities.

Roundup has increased roughly $23 thus far, seed corn up approximately $40; D & P fertilizer increased $400/ton spring 2008 over spring 2007; Anhydrous ammonia (NH3) increased $300/ton 2008 over 2007; potash upwards of $300/ton; 28% nitrogen increased $100/ton; 32% nitrogen increased $88; CRC insurance premium up 35% for 160 bpa at 75% coverage w/o biotech; CRC soybean insurance up by 42%; and tax assessment on better soils has gone up 10% with another 10% increase predicted next year.

An average 250 horsepower tractor has increased in price from $203,400 in 2007 to $226,651 in 2008.

Likewise, an 8-row combine has increased from $220,000 last year to $231,616 in 2008.

You all know what has happened to fuel prices, cash rent and the cost of farmland.

In thinking about how the farmer spends, Cornelius feels a farmer looks at money kinda like the old farm barn lot manure pile.

"It's of little good unless it is spread around." But the questions is whether it is being spread too thin to be of much good.

Well, Cornelius advises the farmer-producer to be careful in his "spreading around". Remember the 80s, use a sharp pencil, and be cautious.

Cornelius tells of a train trip he took a while back to Chicago. Sitting beside him was a big city lawyer who obviously had a low opinion of the intellectual qualities of a farmer.

The lawyer asked Cornelius if he was interested in playing a game to whittle the time away on their trip.

The lawyer proposed that he would ask Cornelius a question and if he couldn't answer he would owe the lawyer $5.00.

Likewise, alternately, Cornelius could ask the lawyer a question, to which the lawyer would owe $5 to Cornelius, if the question was unanswered or incorrectly answered.

Now, Cornelius is about as tight as a bull's rump in fly-time and he figured that lawyer fellow was too narrow "between the' eyes.

So, he quickly tells the lawyer he would not wager a man so smart as he. The lawyer thereby agreed to Cornelius' summation of his intelligence and gave him odds 50 to 5.

If the lawyer couldn't answer Cornelius question he would owe the farmer $50 dollars and likewise Cornelius failure to correctly answer the lawyers question would merit the lawyers $5 dollars.

The lawyer in contempt for the farmer even gave Cornelius first chance to ask the question. Cornelius took the bait and went whole hog (put his best effort forward).

Cornelius gathered his wits and asked the lawyer "What goes up the hill with four legs and comes back down with 5 legs?"

After much concentrated thought, the lawyer finally admitted he had no idea and could not answer the question. Cornelius then gave the lawyer opportunity for his question.

The lawyer defiantly asked, "what goes up the hill with four legs and comes backs down with five legs"?

Cornelius quickly replied, I have no idea! Here's your 5 dollars, give me my $50 dollars!"

With that the lawyer stewed in his own juice (problems of his own making).

Some might not hold today's farmer in high regard as to his abilities as a businessman. In the future, as in the past, these abilities are critical to his survival.

Let us not get out foxed into thinking these high commodity prices have us chopin' tall cotton.

Keep a sharp eye on expenses and don't count your chickens before they're hatched" (don't count on success before it comes).

Remember the 80s. If'n you do not heed these warnings, you might have as much chance of economic viability as a grasshopper ina' chicken house!

See ya later

Barnyard Bruke