Friday, March 11, 2011

Just When Things Look Up.......

Well, that didn't take long for the unrest in the middle east for oil to shoot over the $100/bbl mark! And then it almost overnight translated into price increases across the board! Our vendors won't quote on future orders for our supplies and fuel, but one thing is for sure....we're paying more for things we need now. So unless things calm down soon, we're going to have to raise our prices. We'll do our best to hold costs in check and we'll announce our price increase in enough time should you wish to avail yourselves to product at a lower price. But.....being forewarned means being prepared.

Also, we're about to get our broiler program rolling for the year. We don't need reservations and deposits, but if you think you'll be looking to load up and want to make sure we have you covered, give us a "heads-up" as soon as possible. While the old program of reservations was hard to manage for us, it did give us a powerful management tool- how many birds do we need to raise?

Why does energy cost impact a grass based farm so hard? Our beef animals eat grass, grown right there, right? Yes, they eat grass and not energy intensive corn, but our long winters pushes us to put up their forage for nearly half a year. Supplies such as plastic wrap for silage bales to anything related to the machinery needed to make this all work is hit by high steel prices, shipping and we do use fuel- both biodiesel and petroleum diesel. The prices on all those supplies are way up NOW and we have to buy them now to be ready for harvest that comes as early as May/June.

For chicken, they are not ruminants and we must buy feed for them. This item is up over 10% already. Lots of transport/machinery/energy goes into making this feed. We have even less control over this item!

There appears to be little elasticity in many of the major markets that affect us. This fact makes us think that we are "skating on thinner ice" with regard to price volatility on everything we use. Are we are peeking into a new era? A goal here is to use less energy and iron for what we do.....and to use what we do use with utmost care and efficiency.