cost of production organic crops€¦ · represent the average cost of organic production in...

2020 Cost of Production

Organic Crops

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Date: January, 2020

This tool is available as an Excel worksheet at: or at your local is also available to helpdetermine machinery costs.

Additional information and resources on organic crop production in Manitobais available at:

Note: This budget is only a guide and is not intended as an in-depth study of the cost of production of this industry. Interpretation and use of this information is the responsibility of the user. If you need help with a budget, contact your local Manitoba Agriculture and Resource Development Office.

Organic Crop Production Costs - 2020Guidelines For Estimating

The following budgets are estimates of the cost of producing the most commonly grown organic field crops in Manitoba. General Manitoba Agriculture and Resource Development recommendations are assumed for crop fertility management. These figures provide an economic evaluation of the crops and estimated yields required to cover all costs. Costs include labour, investment and depreciation, but do not include management costs, nor do they necessarily represent the average cost of organic production in Manitoba.

These budgets may be adjusted by putting in your own figures. As a producer you are encouraged to calculate your own costs of production for various crops. On each farm, costs and yields differ due to soil type, climate and agronomic practices.

The Farm Machinery Custom and Rental Rate Guide

www.manitoba.ca/agricultureManitoba Agriculture and Resource Development Office.

Organic Crops

https://www.gov.mb.ca/agriculture/farm-management/production-economics/machinery-costs.html

https://www.gov.mb.ca/agriculture/farm-management/production-economics/cost-of-production.html

http://www.gov.mb.ca/agriculture/contact/index.html

http://www.gov.mb.ca/agriculture/crops/production/organic-crops.html

Guidelines: Organic Crop Production Costs 2

Manitoba Agriculture and Resource Development

HRS Hemp Soy-Flax Peas Wheat Oats Oil beans Barley Fall Rye

A. Operating CostsSeed & Treatment $56.39 $42.50 $41.04 $36.00 $53.75 $75.60 $27.50 $24.00Fertility $118.97 $118.97 $118.97 $118.97 $118.97 $118.97 $118.97 $118.97Compost $12.23 $12.23 $12.23 $12.23 $12.23 $12.23 $12.23 $12.23Fuel $19.57 $19.62 $19.78 $20.29 $19.53 $19.60 $19.78 $19.62Machinery Operating $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00Machinery Lease $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Rental and Custom $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00Crop Insurance $29.60 $11.23 $32.58 $23.06 $39.68 $11.36 $10.75 $11.17Hail Insurance $6.60 $13.20 $6.60 $6.60 $13.20 $8.58 $6.60 $6.60Other Costs $7.75 $7.75 $7.75 $7.75 $7.75 $7.75 $7.75 $7.75Certification Cost $3.33 $3.33 $3.33 $3.33 $3.33 $3.33 $3.33 $3.33Land Taxes $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00Drying Costs - - - - $20.00 - - -Interest on Operating $7.68 $6.98 $7.35 $6.96 $8.62 $7.77 $6.38 $6.29Total Operating $287.12 $260.81 $274.63 $260.19 $322.06 $290.18 $238.29 $234.96

B. Fixed CostsLand Investment Costs $67.06 $67.06 $67.06 $67.06 $67.06 $67.06 $67.06 $67.06Machinery Costs $67.31 $67.31 $67.31 $67.31 $67.31 $67.31 $67.31 $67.31Storage Costs $1.76 $2.27 $3.98 $9.31 $1.34 $2.04 $3.98 $2.27Total Fixed $136.12 $136.63 $138.34 $143.68 $135.71 $136.41 $138.34 $136.63Total Operating & Fixed $423.24 $397.44 $412.97 $403.87 $457.76 $426.59 $376.63 $371.59

C. Labour $72.00 $72.00 $72.00 $72.00 $72.00 $72.00 $72.00 $72.00

Total Costs $495.24 $469.44 $484.97 $475.87 $529.76 $498.59 $448.63 $443.59

Estimated FarmgatePrice $ per unit $33.00 $13.00 $15.00 $5.00 $1.40 $20.00 $7.00 $8.00Yield per acre (bu or lb.) 15.5 20.0 35.0 82.0 520 18.0 35.0 20.0Unit type bu bu bu bu lb bu bu buGross Revenue / acre $511.50 $260.00 $525.00 $410.00 $728.00 $360.00 $245.00 $160.00

Revenue Ranking 4 9 3 6 1 7 10 11

Operating Expense Ratio 56.1% 100.3% 52.3% 63.5% 44.2% 80.6% 97.3% 146.8%

Marginal Returns Over Operating Costs $224.38 ($0.81) $250.37 $149.81 $405.94 $69.82 $6.71 ($74.96)Over Operating & Fixed Costs $88.26 ($137.44) $112.03 $6.13 $270.24 ($66.59) ($131.63) ($211.59)Over Total Costs (Net Profit) $16.26 ($209.44) $40.03 ($65.87) $198.24 ($138.59) ($203.63) ($283.59)

Profitability Ranking 4 8 3 5 1 6 7 9

Return on Investment (ROI) 3.28% (44.61%) 8.25% (13.84%) 37.42% (27.80%) (45.39%) (63.93%)Return on Asset (ROA) 3.64% (2.79%) 4.38% 1.51% 8.83% (0.78%) (2.58%) (4.91%)

Breakeven Price Per UnitOperating Costs $18.52 $13.04 $7.85 $3.17 $0.62 $16.12 $6.81 $11.75Operating & Fixed Costs $27.31 $19.87 $11.80 $4.93 $0.88 $23.70 $10.76 $18.58Total Costs $31.95 $23.47 $13.86 $5.80 $1.02 $27.70 $12.82 $22.18

Breakeven Yield (Bu or lb.)Operating Costs 8.7 20.1 18.3 52.0 230.0 14.5 34.0 29.4Operating & Fixed Costs 12.8 30.6 27.5 80.8 327.0 21.3 53.8 46.4Total Costs 15.0 36.1 32.3 95.2 378.4 24.9 64.1 55.4

Breakeven Yield Risk Ratio 103% 55% 108% 86% 137% 72% 55% 36%(Yield per acre / BE Yield)

Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry. Interpretation and utilization of this information is the responsibility of the user.

Profitability Analysis

Organic Crop Production Costs 2020 Guidelines (Dollars Per Acre)

Breakeven Analysis



UnderseedWinter Sweet Oat / Pea ForageWheat Clover Mix Peas Alfalfa Red Clover Your Farm

$34.00 $15.75 $49.30 $37.00 $13.13 $25.00$118.97

$12.23 $12.23 $12.23 $12.23 $12.23 $0.00$19.89 $16.39 $16.39 $16.39 $16.39 $9.50$10.00 $10.00 $10.00 $10.00 $10.00 $5.00$0.00 $0.00 $0.00 $0.00 $0.00 $0.00$0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$34.52 $0.00 $0.00 $0.00 $0.00 $0.00$6.60 $0.00 $0.00 $0.00 $0.00 $0.00$7.75 $7.75 $7.75 $7.75 $7.75 $3.88$3.33 $3.33 $3.33 $3.33 $3.33 $0.00

$15.00 $15.00 $15.00 $15.00 $15.00 $0.00- - - - - -

$7.21 $2.21 $3.13 $2.80 $2.14 $1.19$269.50 $82.66 $117.13 $104.50 $79.97 $44.57

$67.06 $67.06 $67.06 $67.06 $67.06 $0.00$67.31 $67.31 $67.31 $67.31 $67.31 $0.00

$5.11 $0.00 $0.00 $0.00 $0.00 $0.00$139.47 $134.36 $134.36 $134.36 $134.36 $0.00$408.97 $217.02 $251.49 $238.86 $214.33 $44.57

$72.00 $72.00 $72.00 $72.00 $72.00 $0.00

$480.97 $289.02 $323.49 $310.86 $286.33 $44.57

$13.0045.0

bu$585.00

2

46.1%

$315.50$176.03$104.03

2

21.63%6.24%

$5.99$9.09

$10.69

2131.5

37

122%

Organic Green Manure Crops



HRS Soy- WinterFlax Peas Wheat Oats Hemp beans Barley Fall Rye Wheat Your Farm

AgriInsurance 80% Insured Value $327.76 $178.52 $352.35 $272.11 $379.46 $269.96 $247.69 $241.61 $359.98Premium Cost (% of Insured) 9.0% 6.3% 9.2% 8.5% 10.5% 4.2% 4.3% 4.6% 9.6%

Costs Not Covered By AgriInsuranceOperating Costs $0.00 $82.29 $0.00 $0.00 $0.00 $20.22 $0.00 $0.00 $0.00Operating & Fixed Costs $95.48 $218.92 $60.62 $131.76 $78.31 $156.63 $128.93 $129.98 $49.00Total Costs $167.48 $290.92 $132.62 $203.76 $150.31 $228.63 $200.93 $201.98 $121.00

AgriInsurance Risk Ratio 114% 68% 128% 105% 118% 93% 104% 103% 134%(AgriInsurance Coverage / Operating Cost)Risk Ranking 4 9 2 5 3 8 6 7 1

Percent Market Price Change -10.0%Percent Crop Yield Change -5%

HRS Soy- WinterFlax Peas Wheat Oats Hemp beans Barley Fall Rye Wheat Your Farm

Market Price ($ per unit) $29.70 $11.70 $13.50 $4.50 $1.26 $18.00 $6.30 $7.20 $11.70Yield (per acre) 15 19 33 78 494 17 33 19 43

Stress Test Scenario = Market Price Down 10%, and Crop Yield Down 5%Gross Revenue / acre $445.50 $222.30 $445.50 $351.00 $622.44 $306.00 $207.90 $136.80 $503.10Marginal Returns Over Operating Costs $158.38 ($38.51) $170.87 $90.81 $300.38 $15.82 ($30.39) ($98.16) $233.60 Over Operating & Fixed $22.26 ($175.14) $32.53 ($52.87) $164.68 ($120.59) ($168.73) ($234.79) $94.13 Over Total Costs (Net Profit) ($49.74) ($247.14) ($39.47) ($124.87) $92.68 ($192.59) ($240.73) ($306.79) $22.13Profitability Ranking 4 8 3 5 1 6 7 9 2

Operating Expense Ratio 64.4% 117.3% 61.6% 74.1% 51.7% 94.8% 114.6% 171.8% 53.6%

Sensitivity Analysis (Stress Test)

Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry. Interpretation and utilization of this information is the responsibility of the user.

AgriInsurance Analysis

MANITOBA ORGANIC SECTOR AT A GLANCE

Crop177

Livestock29

Handlers34

Processors35

Number of Operations

In 2018, Manitoba had a total of 226 organic operations. Seventy-eight percent of the operations grew organic crops.

Cereals30,500

Pulses5,400

Oilseeds5,800

Other Field

Crops…

Fruits/Vegetables1,600

Forage, Green

Manure, Natural Areas

69,900

Crop Type (acres)

In 2018, there was a total of 121,000 acres of organic cropland in Manitoba, 4% of total Canadian acreage. Green manures, forage and natural areas made up 58% of the Province’s organic land.

Oats13,700

Other11,300

Wheat9,100Barley

5,000

Flax4,400

Buckwheat4,100

Peas3,200

Hemp 3,700

Rye2,300

Field Crop Acreage

In 2018, oats, wheat, barley and flax accounted for 64% of the organic field crops grown in Manitoba.

5Guidelines: Organic Crop Production Costs




114%

68%

128%

105%

118%

93%

104%

66%

38%

73%

57%

72%

54% 55%

0%

20%

40%

60%

80%

100%

120%

140%

$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

$350.00

$400.00

Flax Peas HRS Wheat Oats Hemp Soybeans Barley

$ Pe

r Acr

eManitoba Organic - 80% AgriInsurance Risk Analysis -

2020

80% Insured Value 80% Coverage of Operating Costs 80% Coverage of Total Costs

Manitoba Agriculture & Resource Development

103%

55%

108%

86%

137%

72%

55%

0%

20%

40%

60%

80%

100%

120%

140%

160%


Manitoba Organic Breakeven Yield Risk Ratio - 2020

Target Yield as % of B/E Yield


Analysis of your AgriInsurance Coverage of Operating and Total

Costs is an important step in RiskManagement Planning for your farm.

Analysis of ROI (Reward) and the associated AgriInsurance Coverage

of Total Costs (Risk) is useful in comparing the profitability and cost efficiency alongside the production cost risk when evaluating crops to include in your rotation and is an

important step in Risk Management Planning for your farm.

Analysis of your Breakeven Yields compared to Target (or average) Yields gives an indication of how

close to B/E ($0 profit = 100%) each crop in your rotation is if faced with potential production or market price

challenges and is an important step in Risk Management Planning.

3.28%

-44.61%

8.25%

-13.84%

37.42%

-27.80% -45.39%

66%

38%

73%

57%

72%

54% 55%

0%

10%

20%

30%

40%

50%

60%

70%

80%

-50.00%

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%


Manitoba Organic Risk & Reward Analysis - 2020

Return on Investment (Reward) 80% Coverage of Total Costs (Risk)




Seeding Rate Price CostCrop per Acre per Unit per AcreFlax 60 lb $0.94 /lb $56.39Peas 2.50 bu $17.00 /bu $42.50HRS Wheat 2.16 bu $19.00 /bu $41.04Oats 4.00 bu $9.00 /bu $36.00Hemp 25 lb $2.15 /lb $53.75Soybeans 84 lb $0.90 /lb $75.60Barley 2.5 bu $11.00 /bu $27.50Fall Rye 2 bu $12.00 /bu $24.00Winter Wheat 2.0 bu $17.00 /bu $34.00

Green Manure CropSweet Clover 7 lb $2.25 /lb $15.75Forage Oat /Vetch Mix 170 lb $0.29 /lb $49.30 (50 lb oats, vetch)Forage Peas 2 bu $18.50 /bu $37.00Alfalfa 3.75 lb $3.50 /lb $13.13

Underseed CropRed Clover 10 lb $2.50 /lb $25.00

Soil Fertility Rotation Greenmanure Plowdown rotation 1 year every 4 yearsRed Clover Underseed rotation 1 year every 4 years

Green Manure Crop Usage of each crop typeSweet Clover 0%Forage Oat /Vetch Mix 100%Red Clover 0%Forage Peas 0%Alfalfa 0%

100% (Total must = 100%)

Total Annual Fertility Cost $118.97 /acre

CompostCompost cost $10.50 /tonCompost application cost $10.00 /cubic yard

Compost application rate (tons) 0.45 /acreCompost bulk density (tons) 0.60 /cubic yard

Compost cost $4.73 /acreCompost application $7.50 /acreTotal Compost Cost $12.23 /acre

Total Annual Compost Cost $12.23 /acre

Certification Costs 600 organic acres Annual Fee $1,500 Inspection Fee $500Total $2,000

Cost per acre $3.33 /acre

Seed

Soil Fertility

Organic Certification



Interest Rate on Operating 5.50% Grain HaulingLand Taxes ($/acre) $15.00 Distance to storage 6 miles roundtripLabour rate ($/hour) $24.00 Distance to market 0 miles roundtripMachinery Operating ($/acre) $10.00 Grain truck fuel use 5 Miles per Imp. GallonOther Costs ($/acre) $7.75 Grain truck size 475 bushelsFuel Cost ($/litre) $0.95

Labour Crop Hail Drying StorageCrop (hrs/acre) Fuel Insurance Insurance Costs $/acre Seeding Application Swathing Harvest General Total

Flax 3 $19.57 $29.60 $6.60 - $1.76 - - - - - $0.00Peas 3 $19.62 $11.23 $13.20 - $2.27 - - - - - $0.00HRS Wheat 3 $19.78 $32.58 $6.60 - $3.98 - - - - - $0.00Oats 3 $20.29 $23.06 $6.60 - $9.31 - - - - - $0.00Hemp 3 $19.53 $39.68 $13.20 $20.00 $1.34 - - - - - $0.00Soybeans 3 $19.60 $11.36 $8.58 - $2.04 - - - - - $0.00Barley 3 $19.78 $10.75 $6.60 - $3.98 - - - - - $0.00Fall Rye 3 $19.62 $11.17 $6.60 - $2.27 - - - - - $0.00Winter Wheat 3 $19.89 $34.52 $6.60 - $5.11 - - - - - $0.00

Green Manure CropSweet Clover 3 $16.39 $0.00 $0.00 - - - - - - $0.00Forage Oat /Vetch Mix 3 $16.39 $0.00 $0.00 - - - - - - $0.00Forage Peas 3 $16.39 $0.00 $0.00 - - - - - - $0.00Alfalfa 3 $16.39 $0.00 $0.00 - - - - - - $0.00

Underseeded CropRed Clover 3 $9.50 $0.00 $0.00 - - - - - - $0.00

* Storage costs are listed under Fixed Costs on the Summary Page.

TotalCrop L/acre 2.25 3.5 0.75 2.5 1.3 0 1.13 5.54 3

Flax 20.60 3 2 1 1 1 3 0.18Peas 20.65 3 2 1 1 1 3 0.23HRS Wheat 20.82 3 2 1 1 1 3 0.40Oats 21.36 3 2 1 1 1 3 0.94Hemp 20.56 3 2 1 1 1 3 0.14Soybeans 20.63 3 2 1 1 1 3 0.21Barley 20.82 3 2 1 1 1 3 0.40Fall Rye 20.65 3 2 1 1 1 3 0.23Winter Wheat 20.94 3 2 1 1 1 3 0.52Buckwheat 20.59 3 2 1 1 1 3 0.17Sunflower - Oil 20.89 3 2 1 1 1 3 0.47

Green Manure CropSweet Clover 17.25 3 1 2 1 3Forage Oat /Vetch Mix 17.25 3 1 2 1 3Forage Peas 17.25 3 1 2 1 3Alfalfa 17.25 3 1 2 1 3

Underseeded CropRed Clover 10.00 2 0 0 1 3

Operating Costs

Operating Cost ($/Acre)Rental and Custom Costs

Field Fuel UsageNumber of Field Operations & Litres Fuel Per Acre Per Operation Trucks L/acre

swather combine3/4 ton pickup

grain hauling

cultivator or tandem disk

high speed disk

harrow or land roller air drill

row planter misc.



Land Average Land value ($/acre) $3,000 Machinery Organic Crop acres 600 Total Investment ($/acre) $500.00 Owned Land Equity 85% Residual Value (End of Useful Life) 25% Land Financed 15% Useful Life (years) 15 Land Opportunity Cost (Investment Rate) 1.50% Owned Equipment Equity 55%

Equipment Financed 45%Land cost ($/acre) Machinery Opportunity Cost (Investment Rate) 1.50% Finance Rate & Term 4.000% 25 Years Principle & Interest Cost $28.81 Machinery Cost ($/acre) Owned Land Opportunity Cost $38.25 Finance Rate & Term 4.500% 7 Years Total Cost $67.06 Principle & Interest Cost $38.18

Machinery Depreciation Cost $25.00Grain Storage Usage % Cost Owned Machinery Opportunity Cost $4.13 Non-aeration bins 15% $1.75 /bu $67.31 Aeration bins 70% $2.40 /bu Hopper bins 15% $4.20 /bu Storage Financed 60% Machinery Lease cost ($/acre) $0.00

Market Grain Grain Market Grain GrainPower & Misc Equipment Value Usage % Allocation Harvest Equipment Value Usage % Allocation

4WD Tractor $75,000 100% $75,000 Combine $50,000 100% $50,0002WD Tractor $30,000 75% $22,500 Swather $15,000 100% $15,000ATV Quad $4,000 75% $3,000 PTO Auger $4,500 100% $4,500

$0 0% $0 Auger $2,000 100% $2,000$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0

Total $100,500 Total $71,500

Market Grain Grain Market Grain GrainSeeding, Tillage, Spraying Value Usage % Allocation Trucks & Trailers Value Usage % Allocation

Cultivator $12,500 100% $12,500 $0 0% $0Harrow $10,000 100% $10,000 Tandem Grain Truck $35,000 100% $35,000Air tank $12,500 100% $12,500 5th wheel flatdeck $2,000 100% $2,000Air drill $32,000 100% $32,000 $0 0% $0Rock picker $1,500 100% $1,500 $0 0% $0tandem disk $7,500 100% $7,500 $0 0% $0granular spreader $15,000 100% $15,000 $0 0% $0

$0 0% $0 $0 0% $0Total $91,000 $91,000 Total $37,000

Owned Equipment TOTAL $300,000 $500.00 per acre

Annual Grain Grain Annual Grain GrainPower & Misc Equipment Lease Usage % Allocation Harvest Equipment Lease Usage % Allocation

enter equipment here $0 0% $0 enter equipment here $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0

Total $0 Total $0

Annual Grain Grain Annual Grain GrainSeeding, Tillage, Spraying Lease Usage % Allocation Trucks & Trailers Lease Usage % Allocation

enter equipment here $0 0% $0 enter equipment here $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0$0 0% $0 $0 0% $0

Total $0 $0 Total $0

Leased Equipment TOTAL $0 $0.00 per acre* Leased equipment costs are listed under Operating Costs on the Summary Page.

Fixed Costs

Owned Equipment Inventory and Current Values

Leased Equipment Inventory



Fuel Costs: Includes fuel used for field work, trucking in inputs and trucking out production.

Machinery Operating Costs: Includes costs for maintenance, repairs, licenses and insurance.

Crop Insurance: (2019 rates)

Other Costs: Includes overhead expenses - hydro, telephone, accounting, buildings, supplies and insurance, etc.

Interest On Operating: Interest charges on operating costs are calculated at 5.5% for six months.

Land Cost:

P&I Cost (based on $270,000 Mortgage) = $17,283 payments per year) / 600 acres = $28.81/acre)Investment = (Total Investment x Owned Equity %) x Investment Rate % (eg. (($3,000 x 85%) x 1.5%) = $38.25/acre)

Machinery Cost:

P&I Cost (based on $135,000 Loans) = $22,910 payments per year) / 600 acres = $38.18/acre)Depreciation (Useage Cost) = (Total Investment - Residual Value) / Years Useful Life (eg. ($500.00 - ($500.00 x 25%)) / 15 = $25.00/acre)Investment = (Total Investment x Owned Equity %) x Investment Rate % (eg. ($500 x 55%) x 1.5%) = $4.13/acre)

Depreciation Cost = Original Cost - Salvage ValueUseful Life

Investment Cost = Original Cost + Salvage Value x Investment Rate2

Estimated Farmgate Values: Crop prices are based on deferred delivery contract prices for fall 2020. Estimated yields are based on 60% of MASC 10 year averages for Manitoba for all crops except for hemp and buckwheat at 90%

Storage Cost:Storage costs for each crop are based on estimated yields entered on the Summary page. Budget assumed 60% financed at 4% for 20 years.

Profitability, Breakeven & Risk Analysis Formulas:Gross Revenue = Price per unit x Yield per acre (eg. wheat: $15.00/bu x 35bu/ac = $525.00/ac)Net Profit = Gross Revenue - Total Cost (eg. wheat: $525.00 gross revenue - $484.97 total cost = $40.03 per acre)Operating Expense Ratio = (Operating Cost / Gross Revenue) x 100 (eg. wheat: $274.63 operating expense / $525.00 total cost = 52.3%)Return on Investment (ROI) = (Gross Revenue - Total Cost) / Total Cost (eg. wheat: ($525.00 - $484.97) / $484.97 = 8.25%)Estimated Return on Asset (ROA) = (Margin Over Operating - Labour - Machinery Depreciation) / (Land Investment Cost + Machinery Investment Cost) (eg. wheat: ($250.37 margin - $72.00 labour - $25.00 dep.) / ($3000 land cost + $500.00 machinery ) = 4.38%) Breakeven Price = Cost / Target Yield (eg. wheat cost $484.97 / 35 bu = $13.86 per bu)Breakeven Yield = Cost / Price per Unit (eg. wheat cost $484.97 / $15.00 bu = 32.3 bu)Breakeven Yield Risk Ratio = (Yield per Acre / Breakeven Yield) x 100 (eg. wheat yield 35 bu/ac / 32.3 bu BE = 108 %)AgriInsurance Risk Ratio = (AgriInsurance Coverage / Operating Cost) x 100 (eg. wheat coverage $352.35/ac / $274.63 operating expense = 128 %)

Created and maintained by January, 2020For more information, contact your local

Darren Bond Laura Telford Roy ArnottFarm Management Specialist Sector Development Specialist A/Manager Farm Management

Farm storage requirements were assumed to cost $1.75/bushel for 15% of the storage, $2.40/bushel for 70% aerated storage and $4.20/bushel for 15% hopper storage.

Other Assumptions

Risk Area #2 "D" soil zone at 80% coverage and additional hail insurance at $200/acre coverage for all crops. Flax, HRS Wheat, Oats, Winter Wheat, Peas, Barley and Hemp are based on organic insured values.

Based on approximate average land values. Budget assumed 1.5% financed at 4% for 25 years, plus 1.5% land equity opportunity cost. Budget can be used to estimate cashflow by removing investment cost.

Based on approximate average machinery values. Budget assumed 45% financed at 4.5% for 7 years, depreciation costs over 15 years with a 25% residual value, plus 1.5% machinery equity opportunity cost. Budget can be used to estimate cashflow by removing depreciation and investment cost.

Land Taxes: The average cost based on land tax assessment and mill rates of a sample of municipalities growing crops less provincial tax rebate.

Manitoba Agriculture and Resource Development Farm ManagementManitoba Agriculture and Resource Development Office or:

mailto:[email protected]#



http://www.gov.mb.ca/agriculture/business-and-economics/farm-business-management-contacts.html

http://www.gov.mb.ca/agriculture/contact/index.html

Technical Information for Producers Considering a Transition to Organic Production

The Transition Process

Canadian Organic Standards (CAN/CGSB-32.310 and 32.311) require operators in transition to demonstrate that prohibited substances such as synthetic fertilizers and pesticides have not been applied to fields for at least 36 months. However, producers can wait until 15 months prior to harvesting an organic crop to make an application to an organic Certification Body. During this period, expect at least one on-farm pre-inspection to ensure compliance with standards.

Although standards require operators to aim for a complete transition of the entire operation, the enterprise can maintain, in addition to land in transition, a non-organic production system on other acres. In the case of split production – i.e. where crops grown under organic and non-organic production are visually distinguishable, as for example with red and orange carrots, producers need only keep good records to ensure that conventional products are not sold as organic. Parallel production, in which organic and conventional crops look exactly the same, as for example with the same variety of organic and conventional wheat, is not allowed with a few exceptions for researchers, perennial crops, vegetative propagating materials and transplants.

A lot of thinking and planning must happen before you file your initial organic plan with a Certification Body. You will need a plan for building soil fertility, managing pests, diseases and weeds as well as for segregating organic and conventional ingredients on your farm.

The following parts of the organic plan are particularly important for success. First, a good crop rotation that alternates plants from different families over cropping seasons will go a long way to reducing disease risk. Second, nutrient management is more important in organic agriculture than in conventional. Options for building nutrients include planting a dedicated green manure – a legume crop that fixes its own nitrogen, every few years. The green manure is plowed into the soil so that nutrients become available to the following crops. Producers need to carefully plan rotations to match nutrient needs of the crops in the rotation with nutrient availability. Producers will typically plant a crop with high nitrogen needs in the year following termination of a green manure crop, while a nitrogen-scavenging crop such as oats, or a nitrogen-fixing legume cash crop is seeded when soil nitrogen levels are expected to be lower. Organic producers may also intercrop legumes into cash crops to provide a nitrogen bump between green manure years. Phosphorous can be maintained through light applications of animal manure.

Finally, a good weed management program is crucial. Your goal as an organic farmer is not necessarily to eliminate weeds. By getting your crop established without significant weed competition for light, water and nutrients, the crop canopy will cover the soil, starving weeds of the resources they need to affect crop yield. Organic farmers have many weed management strategies and they attack weeds from different angles using many little hammers. Tools include early or late seeding, higher seeding rates, good seedbed preparation, including blind harrowing prior to seeding, narrow row spacing, and low impact cultivation equipment. Specialized equipment from Europe has been a game-changer for Prairie organic farmers, enabling them to do post emergent cultivation in rows as narrow as four inches.



Business Risk Mitigation Strategies in Organic

Consider the following to help you decrease the risk associated with a transition to organic:

Gradual transition Split production is allowed in organic (see above), so consider bringing in a small amount of land to organic each year over a number of years

Cost of Production MB Agriculture and Resource Development produces organic and conventional Cost of Production resources in the same format for most of the same field crops to facilitate direct comparison of costs and returns each year

Crop Insurance Manitoba Agricultural Services Corporation (MASC) has recently changed its organic coverage to include more crops and greater coverage. This also means that premiums have gone up. Pages 4 and 6 in this document will help you determine if organic insurance makes sense for your farm

Forward Contracting Finding that right balance between spot markets and contracting will enable you to decrease stress and keep cash flowing, while still allowing you to take advantage of favourable market conditions that may develop after harvest

Crop Quality Processors pay more for organic crops. In return, they expect high quality grains. Check out PivotandGrow.com for resources on production and post harvest management practices that will help you improve grain quality and decrease dockage

Bin Capacity Organic is a niche market, which means there will often be times when the best strategy is to store your organic crop. Make sure you have the latest in bin technology so that you can keep your crops in top shape while you wait for the right time to sell

Resources

Canadian Food Inspection Agency (CFIA) www.inspection.gc.ca for current regulations and standards, along with a list of accredited Certification Bodies

Canadian Organic Growers (COG) www.cog.ca to order the Organic Field Crop Handbook

Manitoba Agricultural Services Corporation (MASC) www.masc.mb.ca

Manitoba Agriculture and Resource Development www.gov.mb.ca/agriculture/farm-management/production-economics/cost-of-production.html

Manitoba Organic Alliance (MOA) www.manitobaorganicalliance.com signup for their monthly e-newsletter to stay current on organic events

OrganicBiz.ca www.organicbiz.ca for monthly price lists and updates on the organic market

PivotandGrow.com www.pivotandgrow.com for information on organic production and markets



http://www.inspection.gc.ca/

http://www.cog.ca/

http://www.masc.mb.ca/



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http://www.organicbiz.ca/

http://www.pivotandgrow.com/

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