Print This PageManaging Cash Flow with Cotton Choices™
Exploring Cotton Choices with Monsanto’s Marketing& Stewardship Lead, Daniel Kruithoff
To be successful in cropping you need to plan well and ensure you get the timing right. Unfortunately, in agriculture there are many environmental factors out of our control, so leading growers usually focus on things that are within their control. Generally we can control the timing of sowing, coordinating harvesting prior to rainfall events or applying pesticides at the right time.
The timing of management decisions is one thing, having the cash available to take action when it is required is another. In the recent NAB Quarterly Agribusiness Survey it was reported that 56% of agribusiness respondents indicated that cash flow was a challenge, while 37% said it was the biggest challenge.1
Cash flow is a measure of business health and is simply the relationship between money inflows and outflows during a specific period of time. While cash flow is a challenge for all businesses, it is particularly so in agricultural enterprises –
such as on a cotton farm where payment occurs at the end of the season once cotton is ginned. Meanwhile, growers still have to manage the cost of input demands throughout the season to produce the best crop possible.
Understanding that cash flow is critical for success, in 2009 we introduced Cotton Choices, a new program for cotton growers which includes several components that will assist in the management of cash flow.
Cotton Choices offers cotton growers using Bollgard II® with Roundup Ready Flex® technology the choice of: a discount based on area; Late Crop Removal (LCR); or a new dryland End Point Royalty (EPR) program.
How can Cotton Choices help your cash flow?
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Choice 1 provides the opportunity for a discount on trait fees based on area planted
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Bollgard II and Roundup Ready Flex technology have reduced the potential for cost blow-outs in high pest pressure years.
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It allows more predictable operating expenses and the possible reduction in capital investment.
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Anything that helps reduce operating expenses assists in the management of cash flow.
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Choice 2 is the Late Crop Removal option that enables growers to claim up to 100% of their technology fee costs on any crop that fails and is removed prior to April 20th
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This risk management tool protects against the uncertain conditions often faced in agricultural environments and allows growers to plant cotton with more confidence.
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Choice 3 is the dryland End Point Royalty (EPR) program and is designed to reduce upfront costs for growers, deferring the majority of technology fees to the end of the season once the crop is harvested.
