Organic Crop Production Costs for 2018 Manitoba Ag Days January - - PowerPoint PPT Presentation

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Organic Crop Production Costs for 2018 Manitoba Ag Days January - - PowerPoint PPT Presentation

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Organic Crop Production Costs for 2018 Manitoba Ag Days January 18, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Roy Arnott , P.Ag. Farm Management Specialist What we already know Doing your cost of production

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Organic Crop Production Costs for 2018

Manitoba Ag Days – January 18, 2018

Roy Arnott, P.Ag. Farm Management Specialist

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What we already know…

  • Doing your cost of production for

your own farm is the starting point for profitability.

  • Determining your cost per bushel

sold will allow you to build an effective marketing plan.

  • Each year is different! Profitability

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

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Outline:

Grain Markets & Yields COP Summary & Analysis AgriInsurance Analysis Organic vs. Conventional Land Rental Cost – How Much is Too Much? CropPlan Calculator & Other Tools

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2018? Good, Bad or Ugly?

CAUTION: Objects in the Mirror are Closer Than They Appear! CAUTION: Objects in the Mirror are Closer Than They Appear!

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150.8 13.4 12.2 6.2 31.4 8.5 198.1 19.0 17.1 8.6 45.5 11.5 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 110.0 120.0 130.0 140.0 150.0 160.0 170.0 180.0 190.0 200.0 210.0

Hemp Winter Wheat Wheat Brown Flax Oats Soybeans

Yield Per Acre

Manitoba Organic Breakeven Yields (per Acre) ‐ 2017

Breakeven Yield Over Operating Costs Breakeven Yield Over Op & Fixed Costs

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$6.35 $2.43 $3.50 $6.49 $1.51 $5.68 $9.36 $4.10 $5.72 $11.21 $2.80 $9.10 $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00

Canola Winter Wheat Wheat Flax Oats Soybeans

$/Unit

Manitoba Breakeven Price ($/unit) ‐ 2017

Operating Costs Operating & Fixed Costs

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Fixed Cost Management ‐ Conventional

Operating Costs 65% Margin Over Operating 35%

  • Gross Revenue

= Price x Yield Per Acre

  • Margin Over Operating Cost =

Gross Revenue – Operating Costs

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Operating Costs 65% Land Cost 18% Equipment Cost 12% Owner Withdrawl 5%

Fixed Cost Management ‐ Conventional

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Fixed Cost Management ‐ Organic

  • Gross Revenue

= Price x Yield Per Acre

  • Margin Over Operating Cost =

Gross Revenue – Operating Costs

Operating Costs 43% Margin Over Operating 57%

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Operating Costs 43% Land Cost 18% Equipment Cost 12% Owner Withdrawl 27%

Fixed Cost Management ‐ Organic

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Cash Rent Based on Gross Revenue

  • Average range of cash rent across

western Canada is 18 to 22%

  • f gross revenue.
  • But how much is too much???
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Breakeven Land Rent Calculation

Gross Revenue ‐ Operating Cost ‐ Equipment Cost ‐ Labour Cost ‐ Storage Cost = Cash for Land Rental

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Land Rent Based on Investment Return on Land Value

(Landowner check & balance)

Land market value $2,800 per acre x Long Term Investment Rate (5yr) 2.75 % + Property taxes $15.00 per acre Total Cash Land Rental $92.00 per acre

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Analysis specific to your own farm

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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

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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

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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)

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Obviously you’re telling me…

  • Those who produce the most, profit the

most.

  • The more accurate your own numbers,

the greater your chances are for profitability.

  • It’s vital to know the risks and rewards
  • f the different crops.
  • Before seeding, compare crops for

profit probability.

  • After seeding, update your actual costs

to keep on top of profitability

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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

Contact me: Roy Arnott, P.Ag. roy.arnott@gov.mb.ca Killarney Ag Office ‐ 204.523.6424