January 15, 2010

2010 UNL Crop Production Budgets Now Available

The UNL Extension Crop Production Budgets (EC872) have been updated to reflect industry trends and cost changes for 13 crops and 48 cropping system and are now available as an online extension publication. These same budgets, broken down by crop, are also available on the CropWatch Web site (see box). In the near future, the authors will offer Excel spreadsheets for each budget. (We'll announce these in CropWatch as they become available.)  The budgets were prepared by Robert Klein, extension western Nebraska crops specialist, and Roger Wilson, extension farm management/enterprise budget analyst.

2010 Budgets

This year’s budgets offer 13 systems for corn production, including a new budget with SmartStax® seed. The systems differ in how water is applied (rainfed, pivot, gravity), tillage system used (conventional, no-till, ridge till), type of rotation, and seed type used (non-GMO, Roundup Ready®, Bt rootworm resistant).  Similar system differences are included in other crop budgets.

Crops and the number of system budgets for each crop are: corn (13), soybean (8), alfalfa (7), wheat (5), grain sorghum (4), sunflower (2), sugarbeets (2), dry beans (1), sorghum sudan (1), millet (1), pasture (1), oats (1), grass (1), and grass hay (1).

These budgets don’t represent either specific or average operations, but rather are intended to be a base so operators can create new enterprise budgets, tailored to their situation. Costs for power, machinery, labor, and input costs used in these budgets are also listed in the publication so you can review them and adjust these items accordingly in your enterprise budgets.

A key component of crop enterprise budgeting is using appropriate prices for determining the cost of inputs. The variability in the price of inputs continues to be something everyone should be cognizant of when using any budgeting tool.

Changes in Input Costs for 2010

Uncertain input prices were a particular problem in the 2009 budgets, since we saw a huge fluctuation in fuel and fertilizer prices from fall 2008 to spring 2009. These 2010 budgets represent a decline in these costs.

The diesel fuel cost used in the 2009 budgets was $4 per gallon compared to $2 per gallon for the 2010 budgets. While this price may be a little low for 2010, using a round number allows for easy adjustments should prices change.

Fertilizer prices changed even more dramatically from 2009 to 2010, increasing by an average of about 37%. The largest negative price change has been for 10-34-0, which went from an estimated price of $6.84 per gallon in 2009, to $1.90 per gallon in 2010. While changes in other fertilizer prices have not been as dramatic, the average of fertilizer prices used for the 2010 budgets are about 37% of the 2009 budget prices.

Herbicide price changes are a mixed bag. The price of glyphosate dropped from $0.35 per ounce in 2009 to $0.16 (46% of 2009) in 2010, while AAtrex 4L® increased from $4.75 per pint in 2009 to $6.00 (126% of 2009) in 2010.

Seed prices in the budgets remained approximately at 2009 levels. The price of corn seed is difficult to determine, since the actual amount paid is affected by various discounts offered by dealers. It appears that the price of seed utilizing new GMO technology appears to be higher than for those numbers available in past years; however, since fewer refuge acres are required and projected yields are greater using these new hybrids, the extra price for seed may be wholly or partially offset. The 2010 estimated crop budgets show similar cost per unit of production, using the new GMO technology versus the technology of prior years.

Machinery operation costs are calculated using mathematical relationships and estimates developed by the American Society of Agricultural and Biological Engineers. Machinery operation includes both variable and fixed costs, which include labor, fuel, repairs and ownership. An assumption was made that machinery was fully utilized. Underutilized machinery would increase all operational costs.

Materials and service costs include fertilizers, pesticides and seeds, along with their application rates and costs. Interest is calculated on purchased inputs indicating the cost or value of the capital borrowed or used.

Overhead costs include scouting, crop insurance, real estate opportunity costs, and real estate taxes. A total cost-per-unit of production and a cash cost-per unit of production is calculated in the appropriate units such as bushel, ton, and hundred weight.

Note: The Nebraska Crop Enterprise Budgets are cost estimates only and do not include projected incomes.

Roger Wilson
Extension Farm Mangement Budget Analyst