Stocking up on Fert

Discussion in 'Pesticide & Herbicide Application' started by rcreech, Nov 9, 2007.

  1. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,072

    Due to the N market the next 3-5 years are going to be rough on lawn fert (due to the ag market).

    Rumors are that in season prices for lawn fert (32%) could be around $14-15/bag.

    I already have bought all my 28% for my next two corn crops (08 and 09) just to lock input price.

    I already have alot of my lawn fert bought for next year also (excluding my pre and some 30% SCU).

    Met with my lender today and I am looking at buying my next two years of lawn fert now and borrowing the money.

    This will:

    Save me a ton on money in the future (Borrow money at 7.45% as we already know it is going to go up 10% soon, and much more after the 1st of the year).
    Allow me to get a better volume discount
    Lock in my input costs for the next two years (which will keep me very competitive).
    If I raise my prices (2-3%) this year...that is $$ in my pocket and to help pay interest
    Allow me to retail if needed and make some $$$

    Have any of you thought of doing this?

    Locking in my input prices is big and I think it will work great! It will also lock in my price as I continue to grow my business. I am hoping to use my "2 year supply" up by the end of next year but doubt I will.

    Please let me know what do you think?
     
  2. ampeg76

    ampeg76 LawnSite Senior Member
    Posts: 297

    thats an excellent plan brother, good for you:)


    i don't have enough customers to warrant the lending, but i have stocked up on a few things!


    cheers
    mike
     
  3. sedge

    sedge LawnSite Fanatic
    Posts: 34,010


    Just be careful that the economy doesn't slow to the point that you don't have enough customers to use the product that bought ahead of time. Then your savings will be nill.
     
  4. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,072

    That is something to keep in mind....however I think that with the N market, one could atleast buy it now, and even sell it next spring and still make good money or worst case break even. Plus I am plannning on growing my business BIG TIME over the winter months and early spring, so I may not have as much extra as planned (I HOPE)!

    Either way I feel I will be reducing my risk even if you don't save or make much longterm.

    Last year I ran out of some fert and had to pay in season prices....and I never want to do that again.

    If the N market wasn't so volatile, I wouldn't even think of doing something like this.
     
  5. Runner

    Runner LawnSite Fanatic
    Posts: 13,494

    We looked into something like this last spring, but after doing the numbers, it didn't come out right for us because of the amount it would require to store it. The warehouse space and rehandling was just too much.
     
  6. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,072

    What do you mean by rehandling?

    I have plenty of storage so that won't be an issue.

    If you would have had the storage would you have done it? I also will not have to handle it except for taking it off the truck and then eventually loading it on a pickup to aply.

    I am only looking at about 5 trucks loads total.
     
  7. americanlawn

    americanlawn LawnSite Fanatic
    from midwest
    Posts: 5,860

    Sounds like you have a good business plan in order, and I hope you grow even more than what you hope for. We try to stack our fert two pallets high, but our round one product often gets stacked three high, so my only concern is if some of the bags get clumpy after a few months.

    Another thing I like is that you have plenty of storage -- many guys are limited there.

    Best regards rcreech, americanlawn:waving:

     
  8. Runner

    Runner LawnSite Fanatic
    Posts: 13,494

    Yeah,...we were looking at storage space to store approx. 80 ton. (plus chems.). We would've had to take shipment by a certain date, and that would've been somewhere in to the second round. This way, we would already have been through nearly 40 ton. What I meant by rehandling, is every morning (or the night before), having to load the fert. into the trucks. Loading them into the trucks by hand would take up much time...especially when getting the stuff off of other pallet stacks. Right now, it works out well. We pull up to Lesco in the morning (approx. 15 minutes away), they load the pallet with the forklift, grab a case of spray, and we go. It is loaded for us, and we have our warehouse,...also ensuring our product is fresh and dry, and we have any and all extra chems and products we need readily available. Basically, we are paying Lesco to store our stuff for us. The loading for us is just a bonus. Now, if we DID have the storage space, that would be SWEET. that would be an added bonus - even better with a forklift or tractor to load it for us. :)
     
  9. LIBERTYLANDSCAPING

    LIBERTYLANDSCAPING LawnSite Bronze Member
    from Indiana
    Posts: 1,283

    WOW! 15 min away EVERY morning? Thats seems like an inconvenience & extra $$$ in fuel... Not to mention, what if you get there & there are other contractors in line in ft. of you? I know when I go to my Lesco in person, I've had to wait on 2-3 other contractors & only 2 guys work at that store.:cry:
    Oh-but my Lesco is 45 min away anyway....
    Besides...I LOVE to load fert:weightlifter:
     
  10. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,072

    I couldn't imagine that either! I always load my truck the night before so when I go out in the morning I am ready to work!
     

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