Agronomics & Economics Crop Management Decisions Need Both! . - - PowerPoint PPT Presentation

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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

Manager - Crops Industry

• Doing your cost of production

(per bushel sold) for your own farm is the starting point for profitability.

• Chasing short term profitability at

the expense of good agronomy increases your risk and will likely cost you more in the long run.

• Each year is different! Profitability

and risk is dependent on the relationship between yield/price/costs with your financial situation. (Plan for Prosperity)

What we already know…

$323.25 per acre 80% insurance coverage per acre / 40 bu per acre = $8.08 covered risk per bushel

$323.25 per acre 80% insurance coverage per acre / 40 bu per acre = $8.08 covered risk per bushel Breakeven price per bushel $10.20 B/E price per bushel minus $8.08 covered risk per bushel = exposed risk

• aka. = “AFW”

$323.25 per acre 80% insurance coverage per acre / 40 bu per acre = $8.08 covered risk per bushel Breakeven price per bushel $10.20 B/E price per bushel minus $8.08 covered risk per bushel = exposed risk

• aka. = “AFW”

Market price per bushel $11.25 Mkt price per bushel minus $10.20 B/E per bushel = $1.05 Reward

Utilizing COPs in Crop Rotations

• Soybean on Soybean = 93%
• Soybean on Spr. Wheat = 102%
• /+ 9% or $38/ac
• Oat on Canola = 101%
• Oat on Soybean = 108%
• /+ 7% or $24/ac

Utilizing COPs in Crop Rotations

• Planted crop on specific stubbles can

increase/decrease yield, because of:

– Change in disease pressure – Change in weed establishment/spectrum – Biological or physical interactions – Moisture conservation/use

Crop Rotation = Yield Opportunity?

Source: Yield response of Manitoba crops sown on large (>120 acre) fields of various previous crop (stubble) in rotation 2010-2016 (MASC)

Previous Crop Crop Planted Spring Wheat Oat Barley Canola Flax Field Pea Soybean Sunflower Grain Corn Sp Wheat 85 94 95 102 104 103 102 103 96 Oat 91 79 78 95 92 93 100 102 99 Barley 88 90 82 100 102 91 100 96 92 Canola 100 101 103 87 86 98 100 92 99 Flax 96 90 107 103 83 91 98 88 85 Field Pea 102 110 106 104 148

• 95
• 98

Soybean 107 108 107 103 107 90 93 103 103 Sunflower 102 102 106 90 99 85 93 82 97 Grain Corn 98 110 94 110

• 90

101 115 88 Yield/ac 50 bu 101 bu 65 bu 36 bu 21 bu 38 bu 35 bu 1607 lb 121 bu

Economic Opportunity – Crop Sequence

Year 1 Year 2 Year 3 Year 4 Year 5 Economic Returns 1 Sp.Wheat Canola Sp.Wheat Canola Sp.Wheat $142.56

+2% 0% +2% 0%

2 Soybean Corn Soybean Corn Soybean $132.02

+3% +1% +3% +1%

3 Canola Oat Soybean Canola Oat $152.75

+1% 0% +3% +1%

4 Soybean Corn Canola Sp.Wheat Field Pea $134.68

+3% +10% 0% +3%

Note: Yields based on 10yr average from MASC Harvest Acreage Report

Economic Opportunity – Crop Sequence

Year 1 Year 2 Year 3 Year 4 Year 5 Economic Returns 1 Sp.Wheat Canola Sp.Wheat Canola Sp.Wheat $142.56

+2% 0% +2% 0%

$264.40 2 Soybean Corn Soybean Corn Soybean $132.02

+3% +1% +3% +1%

$174.40 3 Canola Oat Soybean Canola Oat $152.75

+1% 0% +3% +1%

$241.70 4 Soybean Corn Canola Sp.Wheat Field Pea $134.68

+3% +10% 0% +3%

$234.60

Note: Yields based on 10yr average from MASC Harvested Acreage Report Yields based on 2017 MASC Harvested Acreage Report

Disease Pressures

Year 1 Year 2 Year 3 Year 4 Year 5 Economic Returns 1 Sp.Wheat Canola Sp.Wheat Canola Sp.Wheat $142.56

+2% -5% 0% -5% +2% -10% 0%-10%

$132.04 2 Soybean Corn Soybean Corn Soybean $132.02

+3% -5% +1% -5% +3% -10% +1% -10%

$122.38 3 Canola Oat Soybean Canola Oat $152.75

+1% 0% +3% +1%

4 Soybean Corn Canola Sp.Wheat Field Pea $134.68

+3% +10% 0% +3%

Note: Yields based on 10yr average from MASC Harvested Acreage Report Slippery Slope Economic Opportunity

Weeds – Incidence, Selection

Year 1 Year 2 Year 3 Year 4 Year 5 Weed Issues 1 Sp.Wheat Canola Sp.Wheat Canola Sp.Wheat

Gp1 HT Gp1,4 LL/Gp1 Gp1,4 LL/Gp1 Gp1,4 WO/GF

2 Soybean Corn Soybean Corn Soybean

RR HT Kochia

RR RR RR RR RR

Fleabane

3 Canola Oat Soybean Canola Oat ?

RR Gp 2,4*,6 RR LL/Gp1 Gp 4,6

4 Soybean Corn Canola Sp.Wheat Field Pea ?

RR RR LL/Gp1 Gp 2,4,6 Gp 1,4, 14

Slippery Slope Economic Opportunity

Nitrogen Efficiency Based on Application Time and Placement

Time and Method

• f Application

Relative Values Spring Broadcast 100% Spring Banded 120% Fall Broadcast 80% Fall Banded 100%

Source: MB Ag Soil Fertility Guide, 2007

Price vs Cost - Fertilizer Pricing

• Questions:
• Is it really cheaper for you to buy in the fall

(cost of money, bins etc.) than in the spring?

• Is it really cheaper to buy from the ‘new’

dealer 20 miles down the road for $5 per tonne less?

• Price – How much money do I need to

hand you to buy my fertilizer.

• Cost – What did I have to give up to get

this price.

Expense vs Investment

• Question: Is fertilizer and expense or

an investment?

• Investment - provides a return over

what you’ve paid.

• Expense – does not provide a return
• ver what you’ve paid.

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

% Potential Yield Seeding Date (week/month)

Reseeding Decision Tool - Canola

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

Farm Information: MASC - Risk Area

RA #2

MASC - Soil Zone

E

MASC - Individual Productivity Index (IPI)

1.00

MASC AgriInsurance Coverage level

80%

Calculated MASC Probable Yield (bu/ac) 34.6 Original Crop Canola Reseeded Crop Canola Estimated 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 15.0 Plant Count - Yield Factor 0.75 Estimated Yield (bu/ac) 26.0 Estimated Gross Revenue ($/ac) $282.60

Reseeding Decision Tool - Canola

Canola Reseeding Evaluation: Reseed Date 1st week June Date - Yield Factor 0.8953 Estimated Reseed Yield (bu/ac) 31.0 Estimated AgriInsurance Reseeding Indemnity ($/ac) $75.36 Estimated Seed Company Reimbursement ($/ac) $0.00 Reseed Seed Costs ($/ac) $60.00 Reseed Machinery Costs ($/ac) $15.00 Estimated Gross Revenue ($/ac) $337.95

(net reseeding indemnity, reimbursements & expenses)

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

Pest Risk Models and Tools

• Difficult to know everything that is happening
• n 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") Variable 10 Low Numbers 10 Estimated Canola Yield 40 bu/ac Estimated Price $10.75 $/bu Estimated Fungicide Cost $21.88 $/acre Estimated 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 High Potential Infection Range 15% 25% Potential $ Return/acre $2.37 $23.87 Potential 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, 2017

Darren Bond

Roy Arnott Farm Management Specialist Farm Management Specialist

Analysis specific to your own farm

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 ($) $0 Added Machinery Purchase Annual Payment ($) $0 Acreage Change - Land Purchase (Additional Annual Payment) $0 Acres Purchased Acreage Change - Land Sale (Reduced Annual Payment) $0 Acres Sold Acreage Change - Land Rental Payments Per Acre (+/-) $0 Acres (+/-) Land Rental Rate (Change $/acre, +/-) $0 Hired Labour Cost (Change +/- $) $0 Owner Withdrawl (Change +/- $) $0 Canadian Dollar Exchange Rate - USD (Change $, +/-) $0.00

(0 cent change from current value, affects fertilizer cost and grain mark

Rese Defau

Cropplan – What If? Analyzer

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

Farm Software & Worksheets (Crops)

• http://www.gov.mb.ca/a

griculture/business- and- economics/financial- management/farm- software-and- worksheets.html

• Farm Machinery Custom & Rental

Rate Guide Calculator - 2016/17

• Crop Land Purchase Values – 2017
• Crop Land Rental Rate - 2017
• Crop Share Lease – 2017
• FertPlan - 2018
• Grain Bin and Farm Building Rental

Cost Planner

• Grain Drying Cost Calculator
• Sclerotinia Treatment Decision Tool

(Canola and Sunflower versions)

Obviously you’re telling me…

• Those who produce the most, profit

the most.

• Before seeding, compare crops for

profit probability and agronomic risks.

• It’s vital to know the risks and

rewards of the different crops.

• Using good agronomy & good

economics, the greater your chances are for profitability.

Questions ?

For more information

Visit our website:

www.manitoba.ca/agriculture

Follow us on Twitter:

@MBGovAg

View our videos on YouTube:

www.youtube.com/ManitobaAgriculture