Lauer © University of Wisconsin – Agronomy Establish Realistic Yield Goals Yield Potential of Soil Growing Season - Growing Degree Units Sub-soil Moisture Management Ability and Philosophy Attitude Toward Risk Willingness to Be Timely 1 What is Your Yield Potential? Source: Lauer, 2008 NCGA ( ), PEPS ( ) Highest recorded corn yields. Records set in 2008 have bold values.

Lauer © University of Wisconsin – Agronomy Objectives Cost analysis of grain enterprises Emphasize soil and water conservation, efficiency, profitability, and competitiveness vs. productivity alone Recognize the way efficient growers integrate practices into a system through: PEPS Contest PEPS Workshops Divisions Corn, Cash Crop: Corn following a legume or non-legume grain crop (i.e. corn, soybean, small grain, etc.) or non-legume forage or cover crops No manure applied. A charge for drying costs assessed. Corn, Livestock: Corn following forage legume or green-manure legumes (alfalfa, red clover, etc.); and/or manure applied on land. Drying costs will not be assessed. Corn silage Soybean PEPS Objectives, Divisions and Districts Districts

Lauer © University of Wisconsin – Agronomy Calculating Grower Return Partial Budget Analysis Corn Price per bushel Price matrix: $2.00, $4.00, $6.00 grPEPS: Weighted Price per bushel = 50% November Average Cash price + 25% March CBOT Futures ($0.15 basis) + 25% July CBOT Futures ($0.10 basis)  November Average Cash price derived from WI Ag Statistics; CBOT Futures prices derived from closing price on first business day in December. Grower return = (Yield x Price) - Input costs - Handling ($0.02 per bushel) - Hauling ($0.04 per bushel) - Trucking (system rate) - Drying (system rate per bushel-point > 15.5%) - Storage (system rate per 30 day) Marketing plan: 50% sold at harvest, 25% at 4 months, and 25% at 8 months. Corn Production Systems Livestock: drying=$0.00, trucking=$0.00, storage=$0.01 On-farm: drying=$0.02, trucking=$0.11, storage=$0.02 Commercial: drying=$0.04, trucking=$0.11, storage=$0.03 3

Lauer © University of Wisconsin – Agronomy Pricing Corn Silage Linn (Minnesota) Silage value ($/T) = Base price + Starch adjustment + NDFD adjustment Base price = Cost of production $60 per DM Ton Starch adjustment = (starch% – 29%) x (0.5 bu/starch) x (corn price $/bu) 29% = average starch content of corn derived from Dairyland Labs 0.5 bu/T = 1% change in starch content NDFD adjustment = (NDFD%) x (0.6 lb milk/NDFD) x (milk price $/lb) 0.6 lb milk = 1% NDFD derived from Allen (48-hr digestion) 4

Lauer © University of Wisconsin – Agronomy Differences between the High (20%) and Low (20%) profit groups Cash Corn (n=108) Livestock Corn (n=77) Soybean (n=96) High 20% Low 20% High 20% Low 20% High 20% Low 20% Grain yield (bu/A) Grain moisture (%) Acre Cost ($/A)$315$313$272$296$194$195 Bushel cost ($/bu)$1.43$1.83$1.09$1.84$3.09$4.32 Grower return ($/A)$204$74$230$92$220$124 Source: Lauer ( )

Lauer © University of Wisconsin – Agronomy How much does it cost to produce corn in WI? Source: Lauer

Lauer © University of Wisconsin – Agronomy How much does it cost to produce corn in WI? Source: Lauer

Lauer © University of Wisconsin – Agronomy Corn and Soybean Cost of Production and Grower Return Source: Lauer

Lauer © University of Wisconsin – Agronomy Corn and Soybean Cost of Production ($/A) District Cash corn Livestock cornSoybean (n=108)(n=77)(n=96) 1$318$250$182 2$311$274$183 3$310$258$197 4$327$309$210 5$378$353$249 Average$321$276$196 Source: Lauer ( )

Lauer © University of Wisconsin – Agronomy Average corn production costs for major inputs Source: Lauer

Lauer © University of Wisconsin – Agronomy Number of Participants in PEPS (n= 2173)

Lauer © University of Wisconsin – Agronomy Verified yields and production costs History Comparative Since 1997, placing based on profitability Prior to 1997, placing based on lowest cost per bushel Soil loss within tolerable “T” level USLE; USDA-NRCS Entry fee = $25, no limit to number of entries Entry deadline = August 1 Awards = $100 to winner for each district/division Total fields evaluated = 2340 PEPS Contest does not account for: Overhead Usually assessed at 18 to 46 % of production costs Examples include:  Plowing snow  Fixing fence  Property taxes / “Real” land costs  Equipping shop  Alimony  Farm pick-up  Tiling  Desk management “Best of the Best” – Low yielding fields not usually entered PEPS Contest Strengths and Weaknesses

Lauer © University of Wisconsin – Agronomy How can you get involved in PEPS? Contest versus Verification options Does it pay to grow corn on my farm? Do I know my production costs? If I do, how do I compare? How efficient is my operation? Am I a good steward? If I make changes, how does that affect my bottom-line? What role can agents/dealers/consultants play in PEPS? Promote among producers who would benefit (helping with forms, soil loss and yield checks) Encourage National Corn Growers Association yield contestants to enter Provide input to PEPS committee from “real world” Financial sponsorship

Lauer © University of Wisconsin – Agronomy Know Your Production Costs Changes in Grower Return With PEPS Participation Source: Lauer (PEPS, , n= 128)