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Agronomics & Economics Crop Management Decisions

Need Both!

Roy Arnott, P.Ag.

Farm Management Specialist

Anastasia Kubinec, M.Sc., P.Ag., CCA

A/Manager - Crops Industry Branch

Planning Should Start with COP’s

The corner stone of your Production , Management, or Marketing plan should start with calculating Cost of Production (COP).

Knowing your COP (per bushel) is the first step in deciding what is a profitable or breakeven price.

Cost : Benefit needs to be evaluated for every change to your crop plan.

$253.52

$191.77 $182.06 $198.20

$150.94

$311.19

$120.16

$122.17 $124.83$119.63

$128.17

$130.84$30.00

$30.00 $30.00$30.00

$30.00

$30.00

$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

$350.00

$400.00

$450.00

$500.00

Canola Wheat Winter Wheat Soybeans Oats Corn

$/Acre

Manitoba Crop Production Costs ($/Acre) ‐ 2017

A.  Operating Costs B.   Fixed Costs C. Labour

$0.00

$100.00

$200.00

$300.00

$400.00

$500.00

$600.00

Canola Wheat Winter Wheat Soybeans Oats Corn

$/Acre

Manitoba Crop Marginal Returns ($/Acre) ‐2017

Gross Revenue Margin Over Operating Margin Over Operating & Fixed

$6.34

$3.49

$2.43

$5.51

$1.51

$2.59

$9.34

$5.71

$4.09

$8.83

$2.79

$3.68

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

Canola Wheat Winter Wheat Soybeans Oats Corn

$/Unit

Manitoba Breakeven Price ($/unit) ‐ 2017

Operating Costs Operating & Fixed Costs

106.4%

100.0%

111.3%

119.2%

103.5%

108.0%

90.0%

95.0%

100.0%

105.0%

110.0%

115.0%

120.0%

125.0%

Canola Wheat Winter Wheat Soybeans Oats Corn

Manitoba Breakeven Yields (per Acre) ‐ 2017

Target or Average Yield as % of B/E Yield

($6.56)

($20.55)

$13.20

$35.61

($6.04) ($6.51)

($30.00)

($20.00)

($10.00)

$0.00

$10.00

$20.00

$30.00

$40.00

Canola Wheat Winter Wheat Soybeans Oats Corn

$/Acre

Manitoba Crop Marginal Returns 'Stress Test' ‐Price Down 10% & Yield Down 5% ($/Acre) ‐ 2017

Margin Over Op & Fixed Costs

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$53.95

$69.92

$40.74

$88.12

$60.68

$106.83

$30.00

$30.00

$30.00

$30.00

$30.00

$30.00

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

Canola Wheat Winter Wheat Soybeans Oats Corn

$/Ac

reManitoba Costs Not Covered By 80% Insured Value 

AgriInsurance ‐ 2017

Operating Costs Fixed Costs Labour

What is the best stubble to plant the Soybeans on for 2017:

A. WheatB. CornC. CanolaD. Anything, can’t go wrong

Crop Rotation – Yield (2010-2015)

Stubble

Crop Planted

Sp.Wht W.Wht Oat Canola Flax Soybean SF Corn

Sp.Wheat 85 84 98 102* 105 101* 101 98

W.Wheat 75 83 97 98 94 105 87 74

Oat 93 86 77 95 92 100 104 99

Canola 101 105* 101 86 87 100* 75* 99

Flax 96 104 97 103 79 98 71 78

Soybean 108 93 108 104 104 94 101* 103

Sunflower 102 NSD 103 91 101 93 NSD 95

Corn 98 67 111 112 NSD 102 119 89

Source: MASC Harvest Production Reports

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6NET

Return#1

CanolaWheat (+1%)

Canola (+2%)

Wheat (+1%)

Canola (+2%)

Wheat (+11%)

$182 $176 $190 $176 $190 $176 $1090

Economics in Rotations

Gross revenues minus operating costs adjusted from MASC Crop Rotation chart

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6NET

Return#1

CanolaWheat (+1%)

Canola (+2%)

Wheat (+1%)

Canola (+2%)

Wheat (+11%)

$182 $176 $190 $176 $190 $176 $1090

#2Canola

Wheat (+1%)

Soybean (+1%)

Canola (+4%)

Wheat (+1%)

Soybean (+1%)

$182 $176 $197 $199 $176 $197 $1127

Economics in Rotations

Gross revenues minus operating costs adjusted from MASC Crop Rotation chart

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6NET

Return#1

CanolaWheat (+1%)

Canola (+2%)

Wheat (+1%)

Canola (+2%)

Wheat (+11%)

$182 $176 $190 $176 $190 $176 $1090

#2Canola

Wheat (+1%)

Soybean (+1%)

Canola (+4%)

Wheat (+1%)

Soybean (+1%)

$182 $176 $197 $199 $176 $197 $1127

#3Canola

W.Wheat(+5%)

Soybean(+5%)

Oat(+8%)

Canola (-5%)

W.Wheat(+5%)

$182 $238 $228 $177 $160 $238 $1223

Economics in Rotations

Gross revenues minus operating costs adjusted from MASC Crop Rotation chart

• How Much Fertilizer Were You or Your Clients Able to Apply in Fall 2016?

A. NoneB. 25% of fields intendedC. 50% of fields intendedD. 75% of fields intendedE. Same amount as other years

Nitrogen Efficiency Based on Application Time and Placement

Time and Method of Application Relative ValuesSpring Broadcast 100%Spring Banded 120%Fall Broadcast 80%Fall Banded 100%

Source: MB Ag Soil Fertility Guide, 2007

Fall vs. Spring Purchase• True or False – Fertilizer is always priced

lower in the previous fall than in the spring?

A. TRUEB. FALSE

Fall vs. Spring Purchase• True or False – Fertilizer is always priced

lower in the previous fall than in the spring?

• Almost True – but not always.

• Based on long term data - Roughly 15% increase from fall to spring.

$0

$100

$200

$300

$400

$500

$600

$700

$800

$90020

01

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Price ($/M

T)Urea Nitrogen Fall vs. Spring Prices (2001‐2017)

Previous Fall  Spring Previous Fall Trend Spring Trend

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,60020

01

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Price ($/M

T)

11‐52‐0 Fall vs. Spring Prices (2001‐2017)

Previous Fall Spring Previous Fall Trend Spring Trend

13.3%

17.5% 17.3%16.6%

20.7%

13.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Average Increase 2001‐2017

Average without 2009

Average without 2008 and 2009

% Price Change

Fertilizer  Spring vs. Fall Price Change

46‐0‐0 11‐52‐0

Reseeding Decision Tool - Canola*** Enter/select changes to items in BLUE only ***

Farm Information:MASC - Risk Area RA #2MASC - Soil Zone EMASC - Individual Productivity Index (IPI) 1.00MASC AgriInsurance Coverage level 80%Calculated MASC Probable Yield (bu/ac) 34.6Original Crop CanolaReseeded Crop CanolaEstimated Market Price ($/bu) $10.89

Damaged Canola Plant Stand Evaluation: Plants/m2

Field Sample Plant Counts/m2 15 * enter up to (5) plant counts in the boxes to the right

* leave entries blank if less than (5) counts were taken

* 10.8 plants/m 2 = approx. 1 plant/ft 2

Average Plant Count/m2 15.0Plant Count - Yield Factor 0.75Estimated Yield (bu/ac) 26.0Estimated Gross Revenue ($/ac) $282.60

Reseeding Decision Tool - Canola

Canola Reseeding Evaluation: Reseed Date 1st week JuneDate - Yield Factor 0.8953Estimated Reseed Yield (bu/ac) 31.0Estimated AgriInsurance Reseeding Indemnity ($/ac) $75.36Estimated Seed Company Reimbursement ($/ac) $0.00Reseed Seed Costs ($/ac) $60.00Reseed Machinery Costs ($/ac) $15.00Estimated Gross Revenue ($/ac) $337.95 (net reseeding indemnity, reimbursements & expenses)

Estimated Benefit (Cost) of Reseed Decision ($/ac) $55.35

• When is the “best” week to seed canola?

A. First week MayB. Second week MayC. Third week MayD. Fourth week MayE. First week June

Time of Seeding

40

60

80

100

120

01/05 02/05 03/05 04/05 01/06 02/06 03/06

Spr. Wht Canola Field Pea

Corn Sunflower Soybean

% P

oten

tial

Yiel

d

Seeding Date (week/month)

Based on the Crop COP (simple & easy to use) Cash costs on annual basis (bushel, ac & total) Use it for: pre season planning; growing season 

management; & crop marketing before and after the crop is in the bin. 

NEW !!

MYFARM Crop Management Calculator

2017 Crop YearCost of Production / Marketing / Management

MYFARM Crop Mgmt Calculator

• Cost of Production: Costs per bushel, per

acre, & total farm. Gross revenue estimates.

• Marketing: Breakeven prices &

yields Avg. price sold to date. B/E price on remaining

unsold production.

• Management:Fertilizer, seed and grain

storage required.Op. Expense ratio.AgriInsurance values and

coverage estimates.Avg. & B/E land and

machinery payment per ac

What If? Analyzer

What If? Printed: 2

Crop Price (Change %, +/-) 0%Crop Yield (Change %, +/-) 0%Fuel Cost (Change %, +/-) 0%

Fertilizer Cost (Change %, +/-) 0%Added Machinery Lease Annual Payment ($) $0

Added Machinery Purchase Annual Payment ($) $0Acreage Change - Land Purchase (Additional Annual Payment) $0 0 Acres Purchased

Acreage Change - Land Sale (Reduced Annual Payment) $0 0 Acres SoldAcreage Change - Land Rental Payments Per Acre (+/-) $0 0 Acres (+/-)

Land Rental Rate (Change $/acre, +/-) $0Hired Labour Cost (Change +/- $) $0

Owner Withdrawl (Change +/- $) $0Canadian Dollar Exchange Rate - USD (Change $, +/-) $0.00 (0 cent change from current value, affects fertilizer cost and grain mark

ReseDefau

MYFARM – What If? Analyzer

Calculates the impact of the ‘what if’ changes on costs, revenues and marginal returns.

Pest Risk Models and Tools• Difficult to know everything that is happening

on the farm or in a region• Suite of risk maps or calculators can provide

background for economic decisions– Pest presence– Risk maps based on environmental factors

*** Enter/select changes to items in BLUE only ***

Risk Factor Possible Answers Risk Points

One to two years 10

Low (1% to 10%) 5

Normal 5

Less than 10 mm (0.4") 0

Variable 10

Low Numbers 10

Estimated Canola Yield 40 bu/acEstimated Price $10.75 $/bu

Estimated Fungicide Cost $21.88 $/acreEstimated Application Cost $8.00 $/acre

Number of Years Since last Canola Crop

Disease Incidence in Last Host

Crop Density

Rain in the Last Two Weeks

Weather Forecast

Regional Risk for Apothecia Development

Sclerotinia Treatment Decision Tool

Sclerotinia Treatment Decision Tool

Low HighPotential Infection Range 15% 25%

Potential $ Return/acre $2.37 $23.87Potential Return on Investment 8% 80%

Profit Probability

Spray Decision -

Sclerotinia Treatment Profitability Analysis

Likely Beneficial to Spray

100%

Created and maintained by Manitoba Agriculture Farm Management December, 2017Darren Bond Roy ArnottFarm Management Specialist Farm Management Specialist

Farm Software & Worksheets (Crops)

• http://www.gov.mb.ca/agriculture/business-and-economics/financial-management/farm-software-and-worksheets.html

• Farm Machinery Custom & Rental Rate Guide Calculator ‐ 2016/17

• Crop Land Purchase Values – 2016• Crop Land Rental Rate ‐ 2016• Crop Share Lease – 2017• FertPlan ‐ 2017• Grain Bin and Farm Building Rental 

Cost Planner• Grain Drying Cost Calculator• Sclerotinia Treatment Decision Tool 

(Canola and Sunflower versions)

Questions ?

For more informationVisit our website:

www.manitoba.ca/agriculture

Follow us on Twitter: @MBGovAg

View our videos on YouTube: www.youtube.com/ManitobaAgriculture