Input Costs for 2011

Transcription

1 Input Costs for 2011 Andrew Swenson Extension Farm Management Specialist Department of Agribusiness and Applied Economics North Dakota State University

2 Historic Enterprise Analysis from North Dakota Farm Business Management Education Program

3 Spring Wheat, North Dakota (excluding Red River Valley) N.D. Farm Business Management Education Program Yield Price Misc. Inc Gross Seed Fertilizer Chemical Insurance Fuel & Lube Repair Other Direct Cash Rent Overhead Listed Costs Net Return

4 ND FBM, Selected Wheat Expenses Seed Fertilizer Chemicals Crop Insurance Fuel & Oil Cash Rent

5 ND FBM, Selected Soybean Expenses Seed Fertilizer Chemicals Crop Insurance Fuel & Oil Cash Rent

6 ND FBM, Selected Wheat Expenses Seed Fertilizer Chemicals Crop Insurance Fuel & Oil Cash Rent e 2011e

7 Cost Per Acre on Cash Rented Land ND Farm Business Management (Excluding RRV) e 2011e Wheat Sunflower Canola Soybean

8 Spring Wheat Breakeven Prices at 36 Bu/Acre North Dakota Farm Business Mgmt Program (Excluding RRV) est 2011est e e. BE 36 bu/ac Cost / Acre Direct Gov t Pmt Family Living Adjusted Cost / Acre

9 N.D., Excluding RRV, Spring Wheat Breakeven Prices at 36 Bu/Acre Revenue protection per acre /36 bu** Loan Rate* * National Loan Rate. Loan rate by county will vary. ** Revenue protection insurance guarantee per acre (using 36 bu APH at 70% coverage level) divided by 36 bushels. Actual revenue (crop Insurance indemnity plus market sales) will typically be less than the RA guarantee because the harvest revenue in indemnity payment calculations uses a price determined by futures markets, not local cash markets.

10 NDSU Crop Budgets Are a guide for a large multi-county region Typical or Middle-of-the Road yields and costs at a point in time. Budgets will be wrong for any individual Plug in your own numbers and be aware of the limitations on comparing crop budgets.

11 2011 Up the Cost Ladder 5 10% Soybean & Pulse Crop 10 15% Corn Sunflower Flax 15 20% Small Grains Canola

12 2011 Cost Projections Seed small grain up others fairly flat+ Fertilizer up 50+/-% Fuel & lube up 15-20% Insurance up 50+% Chemical flat + Repair up some Other direct up some Cash rent up Overhead up some

13 Fertilizer Prices Nitrogen 0.48/lb 0.34/lb Phosphorus 0.56/lb 0.32/lb Potassium 0.46/lb 0.46/lb

14 U.S. Urea and Corn Prices, April (March prices for ) $/ton $/bu Urea Corn

15 Major North America Fertilizer Producers (2007) N P K PotashCorp 3 rd largest in world 2 nd largest in world (6% of world) World s largest (22% of world) Mosaic World s largest (15% of world) 3 rd largest in world (14% of world) Agrium One of top three publicly traded N producers 5 th largest in North America 3 rd largest in North America (10 th in world) CF Industries 26% of N market in corn belt 19% of P market in corn belt Terra Industries (CF Industries bought Terra in 2010) Largest ammonia producer in U.S. Source: Companies

16 Fuel Prices Diesel 3.00/gal 2.50/gal Gas 3.00/gal 2.70/gal

17 Futures Based Price Forecasts for Nontaxable Diesel Fuel Source: Kevin Dhuyvetter, Kansas State University

18 Cost Factors Price Quantity - slight adjustment or, - all or none (pesticide decision)

19 Crop Insurance Cost Factors Policy Insured Price Coverage Level Unit Type

20 Insured Wheat Acreage, by Policy, Foster County, ,000 30,000 25,000 Acres 20,000 15,000 10,000 5,000 0 APH CRC RA

21 60,000 Insured Wheat Acreage, by Coverage Level, Foster County, ,000 40,000 Acres 30,000 20,000 10, % 60% 65% 70% 75% 80%

22 HRSW Crop Insurance Prices and ND FBM (excluding RRV) Costs per Acre APH Price/Bu RA Projected Price/Bu Crop Ins. Cost/Ac est. $/bu APH Price/Bu.

23 Crop Insured Price Discovery Commodity Exchange Price Provision Exchange Used Commodity Used Contract Month Projected Price Avg Daily Close Barley CBOT Corn September February 2 July 2 Harvest Price 1 Avg Daily Close Canola ICE Canola November February 3 September 3 Corn CBOT Corn December February October Soybeans CBOT Soybeans November February October Sunflower CBOT Soy Oil December February 4 October 4 Spring Wheat MGE HRSW September February August Durum 5 1) Harvest price has upper limit of two times projected price 2) Multiplied by factor determined by RMA 3) Quotes in Canadian dollars per metric ton are converted to U.S. dollars per pound 4) Divide each settlement price by two and add one cent 5) Same as spring wheat but multiplied by a factor determined by RMA

24 Crop Insurance Revenue Guarantee Comparison, 2010 and 2011 Proj. Revenue Price Example Revenue Guarantee* Crop APH Yield Wheat Durum Barley Corn Soybean Oil Sunfl Conf. Sunfl Canola *at 70% revenue protection coverage level and example APH

25 Land Buyers Producers Investors Recreators Considerations Ability to pay Projected profitability Interest rates Section 1031 & Capital gains tax Psychology (outlook, attitude)

26 NDSU Crop Budget Regions Renville Divide Burke Bottineau Rolette Cavalier Pembina Towner NW NC NE NV Williams Walsh Ramsey Mountrail McHenry Ward Pierce Benson Nelson Grand Forks McKenzie McLean Eddy Sheridan Wells Foster Griggs Steele Traill Dunn Mercer Billings Oliver EC SV Golden Burleigh Kidder Stutsman Barnes Cass Valley Stark Morton SW SC SE Slope Hettinger Logan La Moure Ransom Grant Emmons Richland Bowman Adams Sioux McIntosh Dickey Sargent

27 2011 Crop Budgets, East Central, ND Crop Price Yield Income Cost Net Ret. Soybean Conf Snflr Corn Barley HRSW Canola HRWW Drybean Oil Snflr Flax Durum

28 2011 Crop Budgets, East Central, ND Crop Price* Net Ret. Corn Soybean Barley HRSW Conf Snflr HRWW Oil Snflr Durum Drybean Canola Flax *current (2/18/11) new crop prices

29 Crop Plantings are Determined by Expected Profitability, and Price risk Yield risk Labor & management requirements Existing equipment Rotational consideration hassle factor

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31 Objective The objective of crop compare is to calculate the cash price needed for other crops to yield the same return over variable costs as the base crop

32 CROP COMPARE does not consider the following, (but you can make adjustments) Machinery Storage Labor Management Risk

33 NDSU Projected Crop Budgets Crop Compare