2012 crop budgets update
DESCRIPTION
2012 Crop Budgets Update . Alan Miller and Craig Dobbins Learning Tuesday Webinar February 21, 2012. Purdue University is an Equal Opportunity/Equal Access institution. Yield Relationships Changed. Variable Costs (Average Cropland). Variable Cost Changes Rotation Corn (Average Cropland). - PowerPoint PPT PresentationTRANSCRIPT
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2012 Crop Budgets Update
Alan Miller and Craig Dobbins
Learning Tuesday WebinarFebruary 21, 2012
Purdue University is an Equal Opportunity/Equal Access institution.
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Yield Relationships ChangedCrop 2011 2012
Soybeans 30% of rotation corn yield 33% of rotation corn yield
DC Soybeans 60% of rotation bean yield
70% of rotation bean yield
Wheat 48% of rotation corn yield on low yield soil, 43% of
rotation corn yield on average & high yield soils
43% of rotation corn yield
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0100200300400500600700800900
10001100
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Dol
lars
Per
Acr
e
Year
Indiana Corn Revenue, Variable Cost, and Contribution Margin
Variable Costs Market Revenue Contribution Margin
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0
100
200
300
400
500
600
700
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Dol
lars
Per
Acr
e
Year
Soybean Revenue, Variable Cost & Contribution Margin
Variable Costs Market Revenue Contribution Margin
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0
100
200
300
400
500
600
700
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Dol
lars
Per
Acr
e
Year
Wheat Revenue, Variable Cost & Contribution Margin
Variable Costs Market Revenue Contribution Margin
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Variable Costs (Average Cropland)
Crops 2010$/acre
2011$/acre
2012$/acre
% ∆11 to 12
Continuous Corn 355 415 486 +17%Rotation Corn 342 397 461 +16%Rotation Soybeans 183 200 243 +22%Wheat 149 181 202 +12%Double Crop Soybeans 156 174 205 +18%
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Variable Cost ChangesRotation Corn (Average Cropland)
Cost Component2011
$/acre2012
$/acre% ∆
11 to 12Fertilizers 151 175 +16%Seed 99 107 +8%Pesticides 35 38 +9%Drying fuel 26 32 +23%Machine fuel 23 27 +17%Machinery repairs 14 21 +50%Interest 11 13 +18%Insurance, Misc. 23 33 +43%
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Variable Cost ChangesRotation Soybeans (Average Cropland)
Cost Component2011
$/acre2012
$/acre% ∆
11 to 12Fertilizers 69 83 +20%Seed 59 62 +5%Pesticides 27 29 +7%Machine fuel 10 16 +60%Machinery repairs 10 18 +80%Interest 6 7 +17%Insurance, Misc. 14 23 +64%
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Variable Cost ChangesWheat (Average Cropland)
Cost Component2011
$/acre2012
$/acre% ∆
11 to 12Fertilizers 97 104 +16%Seed 39 41 +5%Pesticides 7 8 +14%Machine fuel 14 16 +14%Machinery repairs 10 18 +80%Interest 5 6 +20%
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Variable Cost ChangesDouble Crop Soybeans
(Average Cropland)
Cost Component2011
$/acre2012
$/acre% ∆
11 to 12Fertilizers 45 62 +38%Seed 68 72 +6%Pesticides 25 26 +4%Machine fuel 10 12 +20%Machinery repairs 10 15 +50%Interest 5 6 +50%
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Contribution Margins, 2010 – 2012 (Average Cropland)
Crops 2010
$/acre2011
$/acre2012
$/acre% ∆
11 to 12Continuous Corn 271 422 371 –12%Rotation Corn 326 495 452 –9%Rotation Soybeans 287 443 400 –10%Wheat 194 394 246 –38%Double Crop Soybeans 122 206 247 +20%
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Contribution Margin by Crop & Yield, 2012
Crops LowYield
($/acre)
AverageYield
($/acre)
HighYield
($/acre)DC Wheat/Soybeans 348 493 638Rotation Corn 310 452 619Rotation Soybeans 285 400 514Continuous Corn 241 371 525Wheat 183 246 308
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Contribution Margin by Rotation, 20121
Crops in RotationLowYield
($/acre)
AverageYield
($/acre)
HighYield
($/acre)Corn – Wheat/DC Beans 329 472 628Corn – Soybeans 298 426 566Soybean – Corn – C-Corn 279 408 553Continuous Corn 241 371 525
1Sum 2012 contribution margins for individual crops, then divide by years in rotation.
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Variable Costs Per Bushel 2010 – 20121
Rotation
Low Yield Average Yield High Yield$/Bushel $/Bushel $/Bushel
10 11 12 10 11 12 10 11 12
Rotation Corn
2.43 2.78 3.22 2.15 2.47 2.83 1.86 2.14 2.44
Rotation Beans
4.46 4.79 5.28 3.73 4.08 4.50 3.31 3.61 4.00
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Fixed Costs Change, 2011 – 2012 (3000 Acre Farm Size)
Rotation
Low Yield Average Yield High Yield$/Acre $/Acre $/Acre
11 12 % ∆ 11 12 % ∆ 11 12 % ∆
MachineryOverhead
68 77 +13% 72 82 +14% 74 84 +14%
Family & Hired Labor
38 45 +18% 38 45 +18% 38 45 +18%
Land Rent
138 146 +6% 167 189 +13% 208 239 +15%
Total Overhead
244 268 +10% 277 316 +14% 320 368 +15%
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Cost Structure – Rotation Corn 2012
Rotation Corn
Low Yield
Average Yield
High Yield
% of Total Cost
% of Total Cost
% of Total Cost
Variable Cost
61 59 57
Fixed Cost
39 41 43
Fixed costs are for 3000 acre farm. Assumes fixed costs are shared equally between corn and beans.
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Cost Structure – Rotation Beans 2012
Rotation Corn
Low Yield
Average Yield
High Yield
% of Total Cost
% of Total Cost
% of Total Cost
Variable Cost
46 43 41
Fixed Cost
54 57 59
Fixed costs are for 3000 acre farm. Assumes fixed costs are shared equally between corn and beans.
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Total Costs Per Bushel 2010 – 20121
Rotation
Low Yield Average Yield High Yield$/Bushel $/Bushel $/Bushel
10 11 12 10 11 12 10 11 12
Rotation Corn
4.31 4.67 5.28 3.89 4.19 4.77 3.54 3.80 4.32
Rotation Beans
10.56 11.05 11.51 9.40 9.73 10.35 8.75 9.03 9.66 1Overhead costs based on corn–bean rotation on 3000 acre farm.
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Source: Keep in Mind Family Living When Doing Crop Budgets, farmdocDAILY, February 17, 2012.
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Returns Above Total Costs Per Acre, 2010 – 2012
Acres & Rotation
Low Yield Average Yield High Yield$/Acre $/Acre $/Acre
10 11 12 10 11 12 10 11 12
1000-acrecorn-bean -43 81 8 19 182 90 77 279 184
3000-acre corn-bean -8 115 47 50 212 130 114 315 224
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-150-100
-500
50100150200250
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Dol
lars
Per
Acr
e
Year
Per Acre Earnings on Corn Bean Rotation (average yield, 1000 acre)
Budgeted Earnings from ID-166
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-150-100
-500
50100150200250
2007 2008 2009 2010 2011
Dol
lars
Per
Acr
e
Year
Budget vs. Estimated Actual Earnings on Corn Bean Rotation (average yield,
1000 acre)
Budgeted Earnings from ID-166 Budgeted Cost at Actual Yield & Price
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Management Implications– Input prices increase sending variable costs higher– Overhead costs will increase in response to strong
contribution margins – machinery overhead, family living/labor expenses, and land rent
– Potential for economic profit – Budget reflects strong demand for corn which may
influence rotation decisions– Risk of margin squeeze/margin decline likely will be
significant because of price volatility
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Questions, Comments
Purdue University is an Equal Opportunity/Equal Access institution.