Step Up Your Grain Game! Crop Economics for 2018 . . . . . . . . . - - PowerPoint PPT Presentation

▶
step up your grain game crop economics for 2018
SMART_READER_LITE
LIVE PREVIEW

Step Up Your Grain Game! Crop Economics for 2018 . . . . . . . . . - - PowerPoint PPT Presentation

Jan 20, 2024 276 likes •753 views

Step Up Your Grain Game! Crop Economics for 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Roy Arnott, P.Ag . & Darren Bond , P.Ag. Farm Management Specialists What we already know Doing your cost of production for

slide-1
SLIDE 1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Step Up Your Grain Game! Crop Economics for 2018

Roy Arnott, P.Ag. & Darren Bond, P.Ag. Farm Management Specialists

slide-2
SLIDE 2

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)

slide-3
SLIDE 3
slide-4
SLIDE 4
slide-5
SLIDE 5
slide-6
SLIDE 6
slide-7
SLIDE 7
slide-8
SLIDE 8

CWRS ranged from $5.60/bu - $8.65/bu; Average - $6.54/bu

Source: Manitoba Agriculture

slide-9
SLIDE 9

Canola ranged from $9.42/bu - $11.82/bu; Average - $11.00/bu

Source: Manitoba Agriculture

slide-10
SLIDE 10

Soybean ranged from $9.83/bu - $11.72/bu; Average - $10.90/bu

Source: Manitoba Agriculture

slide-11
SLIDE 11

Source: Manitoba Agriculture

slide-12
SLIDE 12

Source: MASC & Manitoba Agriculture

slide-13
SLIDE 13

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!

slide-14
SLIDE 14

Price vs Cost ‐ Fertilizer Pricing

  • 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:
  • Investment provides a return over what you’ve

paid, an expense will not.

  • 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?

slide-15
SLIDE 15
slide-16
SLIDE 16
slide-17
SLIDE 17
slide-18
SLIDE 18
slide-19
SLIDE 19
slide-20
SLIDE 20
slide-21
SLIDE 21
slide-22
SLIDE 22
slide-23
SLIDE 23
slide-24
SLIDE 24
slide-25
SLIDE 25
slide-26
SLIDE 26
slide-27
SLIDE 27

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

slide-28
SLIDE 28

$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”
slide-29
SLIDE 29

$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

slide-30
SLIDE 30
slide-31
SLIDE 31
slide-32
SLIDE 32
slide-33
SLIDE 33
slide-34
SLIDE 34

Data Source – MASC Harvest Production Reports (2010-2015)

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

Wheat ‐ Hard Red Spring Canola Wheat ‐ Hard Red Spring Canola Wheat ‐ Hard Red Spring Canola

Rotation Total Marginal Return

Rotation Yield Premium

100% 102% 101% 102% 101% 102%

  • Net Profit (Loss)

$12.01 $50.99 $15.77 $50.99 $15.77 $50.99 $197

Rotation Economic Analysis

Example Rotation #1

slide-35
SLIDE 35

Data Source – MASC Harvest Production Reports (2010-2015)

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

Wheat ‐ Hard Red Spring Canola Wheat ‐ Hard Red Spring Canola Wheat ‐ Hard Red Spring Canola

Rotation Total Marginal Return

Rotation Yield Premium

100% 102% 101% 102% 101% 102%

  • Net Profit (Loss)

$12.01 $50.99 $15.77 $50.99 $15.77 $50.99 $197

Rotation Economic Analysis

Example Rotation #1

Corn Canola Wheat ‐ Hard Red Spring Soybeans Corn Canola

Rotation Total Marginal Return

Rotation Yield Premium

100% 112% 101% 101% 103% 112%

  • Net Profit (Loss)

$42.13 $95.99 $15.77 $53.91 $59.05 $95.99 $363

Example Rotation #2

slide-36
SLIDE 36

Data Source – MASC Harvest Production Reports (2010-2015)

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

Wheat ‐ Hard Red Spring Canola Wheat ‐ Hard Red Spring Canola Wheat ‐ Hard Red Spring Canola

Rotation Total Marginal Return

Rotation Yield Premium

100% 102% 101% 102% 101% 102%

  • Net Profit (Loss)

$12.01 $50.99 $15.77 $50.99 $15.77 $50.99 $197

Rotation Economic Analysis

Example Rotation #1

Corn Canola Wheat ‐ Hard Red Spring Soybeans Corn Canola

Rotation Total Marginal Return

Rotation Yield Premium

100% 112% 101% 101% 103% 112%

  • Net Profit (Loss)

$42.13 $95.99 $15.77 $53.91 $59.05 $95.99 $363

Example Rotation #2

Wheat ‐ Hard Red Spring Canola Oats Soybeans Corn Sunflower Confection

Rotation Total Marginal Return

Rotation Yield Premium

100% 102% 101% 100% 103% 119%

  • Net Profit (Loss)

$12.01 $50.99 $15.67 $49.71 $59.05 $119.24 $307

Example Rotation #3

slide-37
SLIDE 37

Data Source – MASC Harvest Production Reports (2010-2015)

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

Wheat ‐ Hard Red Spring Canola Wheat ‐ Hard Red Spring Canola Wheat ‐ Hard Red Spring Canola

Rotation Total Marginal Return

Rotation Yield Premium

100% 102% 101% 102% 101% 102%

  • Net Profit (Loss)

$12.01 $50.99 $15.77 $50.99 $15.77 $50.99 $197

Rotation Economic Analysis

Example Rotation #1

Corn Canola Wheat ‐ Hard Red Spring Soybeans Corn Canola

Rotation Total Marginal Return

Rotation Yield Premium

100% 112% 101% 101% 103% 112%

  • Net Profit (Loss)

$42.13 $95.99 $15.77 $53.91 $59.05 $95.99 $363

Example Rotation #2

Wheat ‐ Hard Red Spring Canola Oats Soybeans Corn Sunflower Confection

Rotation Total Marginal Return

Rotation Yield Premium

100% 102% 101% 100% 103% 119%

  • Net Profit (Loss)

$12.01 $50.99 $15.67 $49.71 $59.05 $119.24 $307

Example Rotation #3

Soybeans Wheat ‐ Hard Red Spring Canola Soybeans Wheat ‐ Hard Red Spring Canola

Rotation Total Marginal Return

Rotation Yield Premium

100% 108% 102% 100% 108% 102%

  • Net Profit (Loss)

$49.71 $42.15 $50.99 $49.71 $42.15 $50.99 $286

Example Rotation #4

slide-38
SLIDE 38

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???
slide-39
SLIDE 39

Breakeven Land Rent Calculation

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

slide-40
SLIDE 40
slide-41
SLIDE 41
slide-42
SLIDE 42
slide-43
SLIDE 43

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

slide-44
SLIDE 44

Analysis specific to your own farm

slide-45
SLIDE 45

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 – 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)

slide-46
SLIDE 46

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

slide-47
SLIDE 47

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 us: Roy Arnott, P.Ag. Darren Bond, P.Ag. roy.arnott@gov.mb.ca darren.bond@gov.mb.ca Killarney Ag Office Teulon Ag Office 204.523.6424 204.861.2581