1. Crop Costs & Returns in a High Input Strategy versus Common Practices Kent Olson, Bruce Potter, Steve Quiring, Jeff Vetch, Tom Hoverstad, Seth Naeve, Dale Hicks, and Ahnna Olson University of Minnesota June 12, 2007

2. The situation Corn and Soybean yields increasing Minnesota—annual 1.8% corn yield increase and 1.4% soybean yield increase Costs continue to increase Small profit margins Interest in very high yielding corn and soybeans Over 400bu. corn and 100bu. soybeans Ethanol increasing demand for corn

3. Today’s Overview Description of study Yield results Estimated costs of production Estimated net returns

4. High Yield Corn Production at Waseca: tillage and nutrient management strategies Began with Fall tillage in 2003 Corn-Soybean Rotation Corn Planted: 2004 & 2006 Site A—Webster Clay loam 2005 Site B—Nicollet clay loam Finishing in 2007 with soybean WASECA site

5. Treatments at SROC Three Nutrient Strategies: University of Minnesota recommendations (UM recs) High Inputs Variable Inputs Two tillage treatments Fall: none or 16” Deep Zone Tillage (DZT) Spring: Field Cultivate (SFC) or none WASECA site

6. Nutrient strategies UM recommendations Starter Nitrogen, UAN with herbicides, sidedress Nitrogen High-Input Fall Nitrogen, Starter Nitrogen, UAN with herbicides, sidedress Nitrogen, Broadcast P & K, M500 ™, sulfur Variable Input Starter Nitrogen, UAN with herbicides, sidedress Nitrogen, 9-24-3, SureK™, M500 ™, sulfur WASECA site

7. Corn Yields Southern Research and Outreach Center Waseca, Minnesota 2004-2006 WASECA site

8. Corn Yields at Waseca: UM Rec’s vs. High Input WASECA site

9. Corn Yields, SROC and MN Averages WASECA site

10. Costs of Production Inputs and operations used on trials Machinery costs from Lazarus & Selley late 2005 and a few from Iowa custom survey Typical input costs for Southern Minnesota WASECA site

11. Costs for Corn with UM Recommendations UM Recs Spring FC UM Recs Fall DZT Yield (bu/ac)161.3170 Inputs ($/acre)234.03233.61 Machinery71.6587.12 Land rent160 Ins., Misc. & Op. Interest29.7530.28 Overhead & mgt. costs49 Total costs / acre544.43560.01 Cost / bushel3.373.29 WASECA site

12. Costs for Corn with High Inputs High Input Spring FC High Input Fall DZT Yield (bu/ac) 182190.7 Inputs ($/acre) 293.81296.78 Machinery 74.7590.22 Land rent 160 Ins., Misc. & Op. Interest 31.1431.22 Overhead & mgt. 49 Total costs / acre 608.70627.29 Cost / bushel 3.343.29 WASECA site

13. Corn Production Cost Summary - Waseca WASECA site

14. Estimated Returns to Land, Management, & Overhead Using treatment yields and estimated costs of production WASECA site

15. Returns from Corn to Land, Management & Overhead WASECA site

16. Concluding Comments - Waseca “High Input” has highest yields Similar Costs per bushel Except HI DZT has higher costs High Input has a slightly higher returns as corn price increases WASECA site

17. Treatments at SW ROC at Lamberton Two strategies: Common practices High input strategy Three cropping sequences: Continuous corn Corn-Soybean Soybean-Corn LAMBERTON

18. Cultural practices Common practices strategy University or common recommendations Fall urea or anhydrous, some starter fertilizer 34,000 seeds/ac for corn High Input strategy Fall urea, plus beef manure in alternate years Higher spring NPK plus sulfur and zinc, higher starter, side-dress N in June 38,000 seeds per acre Tillage: moldboard in ’03 then on high input and continuous corn Weed control was the same Insecticide applied to continuous corn LAMBERTON

19. Corn and Soybean Yields Southwestern Research and Outreach Center Lamberton, Minnesota 2004-2006 LAMBERTON

20. Corn Yields, SW ROC LAMBERTON

21. Corn Yields, SW ROC LAMBERTON

22. Corn Yields, SW ROC and Minnesota averages MN ave. for ’06 is Nov 1 forecast LAMBERTON

23. Soybean Yields, SW ROC LAMBERTON

24. Soybean Yields, SW ROC LAMBERTON

25. Soybean Yields, SW ROC and Minnesota averages MN ave. for ’06 is Nov 1 forecast LAMBERTON

26. Costs of Production Inputs and operations used on trials Machinery costs from Lazarus & Selley late 2005 & a few from Iowa custom survey Typical input costs for Southwestern Minnesota LAMBERTON

27. Costs for “Common Practices” Cont. CornCorn C-SBSoybean C-SB Yield (bu/ac) 17818261 Inputs ($/acre) 210180103 Machinery 838070 Land rent 150 Misc. & Op. Interest 292821 Overhead & mgt. costs 49 Total costs / acre 521488394 Cost / bushel 2.932.686.42 LAMBERTON

28. Costs for “High Input Strategy” Cont. CornCorn C-SBSoybean C-SB Yield (bu/ac) 19221464 Inputs ($/acre) 254258121 Machinery 1029885 Land rent 150 Misc. & Op. Interest 31 26 Overhead & mgt. costs 49 Total costs / acre 586 431 Cost / bushel 3.062.746.71 With no charge for the nutrients in manure LAMBERTON

29. Production cost summary LAMBERTON

30. Production cost summary LAMBERTON

31. Production cost summary with charge for manure nutrients 4.06 3.64 9.68 LAMBERTON

32. Estimated Returns to Land, Management, and Overhead Using treatment yields, estimated costs of production, and three price levels (starting with current “adjusted” target prices) LAMBERTON

33. Returns to Land, Management & Overhead by Rotation SB/C price ratios: 2.32 LAMBERTON

34. Returns to Land, Management & Overhead by Rotation SB/C price ratios: 2.32, 1.92 LAMBERTON

35. Returns to Land, Management & Overhead by Rotation SB/C price ratios: 2.32, 1.92, 2.03 LAMBERTON

36. Concluding comments In this study: “High Input” has highest yields Corn in a C-SB rotation has higher yield than Continuous Corn In both “Common” and “High” “Common Practices” has lowest costs Both per acre and per bushel LAMBERTON

37. Concluding comments, page 2 At current target prices, “Common” C-SB has the “highest” net return As prices rise & SB/C price ratio declines: “Common” Continuous Corn net return increases above C-SB net return But not for High Input “Common Practices” still remains more profitable than “High Input” LAMBERTON

38. Overall Concluding Comments “High Input” has higher yields High Input has a slightly higher corn returns as corn price increases As prices rise & SB/C price ratio declines: “Common” Continuous Corn net return increases above C-SB net return But not for High Input “Common Practices” still remains more profitable than “High Input”

39. Questions? Comments? Thank you!