February 2008

Crop Selection the First Step to Higher Profits

UNL specialists have developed downloadable spreadsheets to help growers select crops and make planting decisions to achieve maximum profit for their farming situation.

Crop prices, as well as spot, contract, and futures prices, are so high that it may appear it is impossible to make a mistake in choosing this year's crop, but careful consideration can yield maximum profit with minimum risk, said Matt Stockton, UNL agricultural economist at the West Central Research and Extension Center. While almost any crop is likely to make money this year, the best crop for the operation can make a lot more, he said.

UNL provides some electronic decision tools to help farmers evaluate their cropping alternatives, Stockton said. These tools were created in Microsoft® Excel® and can be downloaded from the Internet at agmanagerstools.com. The spreadsheets require Excel.

Stockton said the decision aids are simple to use. Each of the nine spreadsheets only compares two crops at a time and contains both irrigated and dryland production. The default values for cash costs and labor were from UNL no-till crop budgets with fuel and fertilizer prices updated for 2008. The difficult issues of machinery depreciation and land ownership costs are omitted, but could be included in each crop type by including these as cash expenses.

These decision aids allow producers to tailor the outcome based on their individual operations and personal price and yield expectations. The electronic spreadsheet format allows for flexibility in altering outcomes based on many scenarios.

Corn, soybeans, and sorghum are included in this decision-aid tool. Different decision aids were created for analyzing the profitability of these crops planted into corn stalks, soybean stubble, and wheat stubble.

Limited analysis was done using actual price quotes. The crops were compared using new crop prices from the Ag Valley Coop's Web site on January 31, 2008. The results of that analysis are available on the West Central Research and Extension Center Web site at http://www.westcentral.unl.edu by clicking on "News" in the top, black menu bar.

From a cost perspective, figures show that it costs less to produce soybeans than corn or sorghum, Stockton said. Of the three crops, the costs for producing corn are highest per acre. As a general rule, as prices and yields decline, the net income from the crop that costs less to grow becomes more favorable when compared to crops with higher production costs.

The important thing to remember is that each decision should reflect the individual's cost and price expectation, which will vary from area to area and from producer to producer, Stockton said.

Faith Colburn
Communication Specialist
West Central Research and Extension Center