crop costs & returns in a high input strategy versus common practices kent olson, bruce potter,...
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Crop Costs & Returnsin a High Input Strategyversus Common Practices
Kent Olson, Bruce Potter, Steve Quiring, Jeff Vetch, Tom Hoverstad, Seth Naeve, Dale Hicks, and Ahnna
OlsonUniversity of Minnesota
June 12, 2007
The situation Corn and Soybean yields increasing
Minnesota—annual 1.8% corn yield increase and 1.4% soybean yield increase
Costs continue to increase Small profit margins
Interest in very high yielding corn and soybeans Over 400bu. corn and 100bu. soybeans
Ethanol increasing demand for corn
Today’s Overview
Description of study Yield results Estimated costs of production Estimated net returns
High Yield Corn Production at Waseca: tillage and nutrient management strategies
Began with Fall tillage in 2003
Corn-Soybean Rotation Corn Planted:
2004 & 2006 Site A—Webster Clay loam
2005 Site B—Nicollet clay loam Finishing in 2007 with soybean
WASECA site
Treatments at SROC Three Nutrient Strategies:
University of Minnesota recommendations (UM recs)
High Inputs Variable Inputs
Two tillage treatments Fall: none or 16” Deep Zone Tillage
(DZT) Spring: Field Cultivate (SFC) or none
WASECA site
Nutrient strategies UM recommendations
Starter Nitrogen, UAN with herbicides, sidedress Nitrogen
High-Input Fall Nitrogen, Starter Nitrogen, UAN with
herbicides, sidedress Nitrogen, Broadcast P & K, M500 ™, sulfur
Variable Input Starter Nitrogen, UAN with herbicides, sidedress
Nitrogen, 9-24-3, SureK™, M500 ™ , sulfur
WASECA site
Corn Yields
Southern Research and Outreach Center
Waseca, Minnesota2004-2006
WASECA site
Corn Yields at Waseca:UM Rec’s vs. High Input
147 143
194
172157
217
160149
201
167
218
187
0
50
100
150
200
250
2004 2005 2006
Bu
shel
s p
er A
cre
UM Recs No Fall Till H.I. No Fall Till UM Recs DZT H.I. DZT
WASECA site
Corn Yields, SROCand MN Averages
0
50
100
150
200
250
2001 2002 2003 2004 2005 2006
Bu
shel
s p
er A
cre
UM Recs No Fall Till H.I. No Fall Till UM Recs DZT
H.I. DZT MN Average SW Assns.
WASECA site
Costs of Production
Inputs and operations used on trials
Machinery costs from Lazarus & Selley late 2005 and a few from Iowa custom survey
Typical input costs for Southern Minnesota
WASECA site
Costs for Corn with UM Recommendations
UM Recs Spring FC
UM RecsFall DZT
Yield (bu/ac) 161.3 170
Inputs ($/acre) 234.03 233.61
Machinery 71.65 87.12
Land rent 160 160
Ins., Misc. & Op. Interest
29.75 30.28
Overhead & mgt. costs 49 49
Total costs / acre 544.43 560.01
Cost / bushel 3.37 3.29
WASECA site
Costs for Cornwith High Inputs
High InputSpring FC
High InputFall DZT
Yield (bu/ac) 182 190.7Inputs ($/acre) 293.81 296.78Machinery 74.75 90.22Land rent 160 160Ins., Misc. & Op. Interest
31.14 31.22
Overhead & mgt. 49 49Total costs / acre 608.70 627.29Cost / bushel 3.34 3.29
WASECA site
Corn Production Cost Summary - Waseca
3.37 3.34 3.293.60
0.000.501.001.502.002.503.003.504.00
$ /
bush
el
UMSFC
HI SFC
UMDZT
HIDZT
WASECA site
Estimated Returns to Land, Management, & Overhead
Using treatment yields andestimated costs of production
WASECA site
Returns from Corn to Land, Management &
Overhead
34
17
3818
189 192201 201
310 328329344
0
50
100
150
200
250
300
350
$ /
acr
e
$2.29 $3.25 $4.00
Corn prices ($/ bu)
UM SFC HI SFC UM DZT HI DZT
WASECA site
Concluding Comments - Waseca
“High Input” has highest yields Similar Costs per bushel
Except HI DZT has higher costs High Input has a slightly higher
returns as corn price increases
WASECA site
Treatments at SW ROCat Lamberton
Two strategies: Common practices High input strategy
Three cropping sequences: Continuous corn Corn-Soybean Soybean-Corn
LAMBERTON
Cultural practices Common practices strategy
University or common recommendations Fall urea or anhydrous, some starter fertilizer 34,000 seeds/ac for corn
High Input strategy Fall urea, plus beef manure in alternate
years Higher spring NPK plus sulfur and zinc,
higher starter, side-dress N in June 38,000 seeds per acre
Tillage: moldboard in ’03 then on high input and continuous corn
Weed control was the same Insecticide applied to continuous corn
LAMBERTON
Corn and Soybean Yields
Southwestern Research and Outreach Center
Lamberton, Minnesota2004-2006
LAMBERTON
Corn Yields, SW ROC
156
199207
168
197205
0
25
50
75
100
125
150
175
200
225
250
2004 2005 2006
bush
els
per
acre
Common Continuous Common C-SB
LAMBERTON
Corn Yields, SW ROC
199
156
207 197
168
205181
202
220
195
229220
0
25
50
75
100
125
150
175
200
225
250
2004 2005 2006
bush
els
per
acre
Common Continuous Common C-SBHigh Continuous High C-SB
LAMBERTON
Corn Yields, SW ROC and Minnesota averages
MN ave. for ’06 is Nov 1 forecast
0
25
50
75
100
125
150
175
200
225
250
2001 2002 2003 2004 2005 2006
bush
els
per
acre
Common Cont. Common C-SBHigh Cont. High C-SBMN ave. SW Assns
LAMBERTON
Soybean Yields, SW ROC
5864
54
0
10
20
30
40
50
60
70
80
2004 2005 2006
bush
els
per
acr
e
Common C-SB
LAMBERTON
Soybean Yields, SW ROC
5864
5461
67
59
0
10
20
30
40
50
60
70
80
2004 2005 2006
bush
els
per
acr
e
Common C-SB High C-SB
LAMBERTON
Soybean Yields, SW ROC and Minnesota averages
MN ave. for ’06 is Nov 1 forecast
0
10
20
30
40
50
60
70
80
2001 2002 2003 2004 2005 2006
bu
she
ls p
er
acr
e
Common C-SB High C-SB
MN ave. SW Assns
LAMBERTON
Costs of Production
Inputs and operations used on trials
Machinery costs from Lazarus & Selley late 2005 & a few from Iowa custom survey
Typical input costs for Southwestern Minnesota
LAMBERTON
Costs for “Common Practices”
Cont. Corn
Corn C-SB Soybean C-SB
Yield (bu/ac) 178 182 61Inputs ($/acre) 210 180 103Machinery 83 80 70Land rent 150 150 150Misc. & Op. Interest
29 28 21
Overhead & mgt. costs
49 49 49
Total costs / acre 521 488 394Cost / bushel 2.93 2.68 6.42
LAMBERTON
Costs for “High Input Strategy”
Cont. Corn
Corn C-SB Soybean C-SB
Yield (bu/ac) 192 214 64Inputs ($/acre) 254 258 121Machinery 102 98 85Land rent 150 150 150Misc. & Op. Interest
31 31 26
Overhead & mgt. costs
49 49 49
Total costs / acre 586 586 431Cost / bushel 3.06 2.74 6.71With no charge for the nutrients in manure
LAMBERTON
Production cost summary
2.932.68
3.062.74
0.000.501.001.502.002.503.003.504.00
$ /
bush
el
Com.Cont.
Com.C-SB
HighCont.
HighC-SB
Corn costs
LAMBERTON
Production cost summary
2.932.68
3.062.74
0.000.501.001.502.002.503.003.504.00
$ /
bush
el
Com.Cont.
Com.C-SB
HighCont.
HighC-SB
Corn costs
6.42 6.71
0.00
2.00
4.00
6.00
8.00
10.00
$ /
bush
el Com. C-SB
High C-SB
Soybean costs
LAMBERTON
Production cost summary with charge for manure nutrients
2.93 2.683.06
2.74
0.000.501.001.502.002.503.003.504.00
$ /
bush
el
Com.Cont.
Com.C-SB
HighCont.
HighC-SB
Corn costs
6.42 6.71
0.00
2.00
4.00
6.00
8.00
10.00
$ /
bush
el Com. C-SB
High C-SB
Soybean costs
4.063.64
9.68
LAMBERTON
Estimated Returns to Land, Management, and Overhead
Using treatment yields,estimated costs of production,
and three price levels(starting with current “adjusted” target prices)
LAMBERTON
Returns to Land, Management & Overhead by Rotation
85
129
51
105
0
50
100
150
200
250
300
$ /
acr
e
$2.29 & 5.31
Corn & Soybean prices ($/ bu)
Com. Cont. Com. C-SB High Cont. High C-SB
SB/C price ratios:2.32
LAMBERTON
Returns to Land, Management & Overhead by Rotation
85
129
51
105
255 245235 238
0
50
100
150
200
250
300
$ /
acr
e
$2.29 & 5.31 $3.25 & 6.25
Corn & Soybean prices ($/ bu)
Com. Cont. Com. C-SB High Cont. High C-SB
SB/C price ratios:2.32, 1.92
LAMBERTON
Returns to Land, Management & Overhead by Rotation
85
129
51
105
255 245235 238
282 279264275
0
50
100
150
200
250
300
$ /
acr
e
$2.29 & 5.31 $3.25 & 6.25 $3.40 & $6.90
Corn & Soybean prices ($/ bu)
Com. Cont. Com. C-SB High Cont. High C-SB
SB/C price ratios:2.32, 1.92, 2.03
LAMBERTON
Concluding comments
In this study: “High Input” has highest yields Corn in a C-SB rotation has higher
yield than Continuous Corn In both “Common” and “High”
“Common Practices” has lowest costs Both per acre and per bushel
LAMBERTON
Concluding comments, page 2
At current target prices, “Common” C-SB has the “highest” net return
As prices rise & SB/C price ratio declines: “Common” Continuous Corn net return
increases above C-SB net return But not for High Input
“Common Practices” still remains more profitable than “High Input”
LAMBERTON
Overall Concluding Comments
“High Input” has higher yields High Input has a slightly higher corn
returns as corn price increases As prices rise & SB/C price ratio declines:
“Common” Continuous Corn net return increases above C-SB net return
But not for High Input “Common Practices” still remains more
profitable than “High Input”
Questions? Comments?
Thank you!