How To Manage Soybean ROI In A Crop Year Impacted By Drought

September 1, 2021

Everything was looking just fine for most soybean producers in South Dakota during the spring 2021 planting season. Bean markets were strong, riding a wave of optimism. A relatively mild, low-moisture winter and early spring made it easy to get into the fields.

The actual growing season, however, has largely not been so kind.

Much of the state endured hotter-than-normal temperatures in June and drought-like conditions throughout the summer, which has in turn impacted soybean crop development and will depress yield come harvest.

Much of the state endured hotter-than-normal temperatures in June and drought-like conditions throughout the summer, which has in turn impacted soybean crop development and will depress yield come harvest.

In extreme cases, some growers are fearing as much as a 50 percent decrease in soybean yield year over year.

And this, of course, will put additional pressure on an operation’s bottom line.

How, then, should producers respond in order to weather the storm as best they can?

Start by evaluating any and all input costs

“This is a business, and you have to operate it as such,” says Lori Tonak, a seasoned ag educator from Kimball who works with growers across the state through the South Dakota Center for Farm/Ranch Management (SDCFRM) at Mitchell Technical College.

Lori Tonak

Tonak notes that there are certain input costs—fertilizer as well as herbicide and fungicide applications—that deserve careful consideration from producers in a drought-stricken year such as this.

“‘Is it really worth putting on more chemicals? What will this do to my bottom line?’” says Tonak. “Those are the hard questions that growers have to ask themselves.”

Tonak teaches alongside SDCFRM program director, Blaine Carey, and fellow instructor, Erin Yost. Tuition costs $1,600 per year, but the program’s objective—to equip producers with the tools and knowledge they need to run a more efficient business operation—can help participating farms manage against tightening margins with smarter, more informed decision-making.

The counsel they’ve largely been offering area growers this year is to pay close attention to those variable operational expenses—not to mention projected revenue, accounting for yield, existing contracts and soybean market trends—when evaluating on-farm decisions.

Tonak says many are opting to forgo fertilizer given the drought effects to reduce expenses. Most are, however, sticking with a planned fungicide in order to hang onto whatever yield they can muster from this year’s crop.

Keep accurate, detailed records of all operational activities

Keeping accurate, detailed records on all on-farm activities, expenses and revenue is always important for producers. And this year’s challenges offer a good reminder as to why.

“These guys really have to look at where they’re sitting,” says Tonak. “There’s an accounting software program, Easy Farm, we highly recommend they use. It’s only for agriculture and it does a great job of tracking everything.”

The SDCFRM program helps farmers get their data set up in the accounting software and provides training and support so that they can track operational expenses and revenue efficiently.

Strong record-keeping provides producers with the information they need to make decisions confidently, particularly when factoring in pending crop insurance claims.

“Crop insurance plays a big role in this kind of year,” says Tonak. “They’re going to look at how much crop insurance will come in to cover these costs to try to salvage something off of this crop.”

Find support through the SDCRFM program

As noted, enrollment in the SDCFRM program costs $1,600 per year. Scholarship assistance is available for qualifying operations, and interested growers can request an on-farm visit to learn more about the accounting software and the end-of-year analysis they can expect prior to signing up.

In addition to advice on in-season management decisions and crop insurance, the program provides growers with tax insights.

Tonak points out that it’s these sorts of business skills that can greatly impact an operation’s financial sustainability over the long haul.

“That’s the goal,” she says, “to get them to that point where they are financially sound and they don’t have to worry as much when a year like this hits.”

For more information on the program, visit or call 800-684-1969.