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

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

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

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

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

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, , SureK™, M500 ™, sulfur WASECA site

Corn Yields Southern Research and Outreach Center Waseca, Minnesota WASECA site

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

Corn Yields, SROC and MN Averages WASECA site

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

Costs for Corn with UM Recommendations UM Recs Spring FC UM Recs Fall DZT Yield (bu/ac) Inputs ($/acre) Machinery Land rent160 Ins., Misc. & Op. Interest Overhead & mgt. costs49 Total costs / acre Cost / bushel WASECA site

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

Corn Production Cost Summary - Waseca WASECA site

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

Returns from Corn to Land, Management & Overhead WASECA site

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

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

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

Corn and Soybean Yields Southwestern Research and Outreach Center Lamberton, Minnesota LAMBERTON

Corn Yields, SW ROC LAMBERTON

Corn Yields, SW ROC LAMBERTON

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

Soybean Yields, SW ROC LAMBERTON

Soybean Yields, SW ROC LAMBERTON

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

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

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

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

Production cost summary LAMBERTON

Production cost summary LAMBERTON

Production cost summary with charge for manure nutrients LAMBERTON

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

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

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

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

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

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

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”

Questions? Comments? Thank you!