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2012 Crop Budgets Update Alan Miller and Craig Dobbins Learning Tuesday Webinar February 21, 2012 Purdue University is an Equal Opportunity/Equal Access institution.
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Budgeted Crop Price Changes 2011 Crop in Jan. 2011 2012 Crop in Oct. 2012 2012 Crop in Jan. 2012 Corn$5.54/bu.$5.40/bu.$5.60/bu. Soybeans$13.12/bu.$11.60/bu.$11.90/bu. Wheat$8.21/bu.$6.40/bu.
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Yield Relationships Changed Crop20112012 Soybeans30% of rotation corn yield33% of rotation corn yield DC Soybeans60% of rotation bean yield 70% of rotation bean yield Wheat48% of rotation corn yield on low yield soil, 43% of rotation corn yield on average & high yield soils 43% of rotation corn yield
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Variable Costs (Average Cropland) Crops 2010 $/acre 2011 $/acre 2012 $/acre % ∆ 11 to 12 Continuous Corn355415486+17% Rotation Corn342397461+16% Rotation Soybeans183200243+22% Wheat149181202+12% Double Crop Soybeans156174205+18%
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Variable Cost Changes Rotation Corn (Average Cropland) Cost Component 2011 $/acre 2012 $/acre % ∆ 11 to 12 Fertilizers151175+16% Seed99107+8% Pesticides3538+9% Drying fuel2632+23% Machine fuel2327+17% Machinery repairs1421+50% Interest1113+18% Insurance, Misc.2333+43%
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Variable Cost Changes Rotation Soybeans (Average Cropland) Cost Component 2011 $/acre 2012 $/acre % ∆ 11 to 12 Fertilizers6983+20% Seed5962+5% Pesticides2729+7% Machine fuel1016+60% Machinery repairs1018+80% Interest67+17% Insurance, Misc.1423+64%
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Variable Cost Changes Wheat (Average Cropland) Cost Component 2011 $/acre 2012 $/acre % ∆ 11 to 12 Fertilizers97104+16% Seed3941+5% Pesticides78+14% Machine fuel1416+14% Machinery repairs1018+80% Interest56+20%
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Variable Cost Changes Double Crop Soybeans (Average Cropland) Cost Component 2011 $/acre 2012 $/acre % ∆ 11 to 12 Fertilizers4562+38% Seed6872+6% Pesticides2526+4% Machine fuel1012+20% Machinery repairs1015+50% Interest56+50%
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Contribution Margins, 2010 – 2012 (Average Cropland) Crops 2010 $/acre 2011 $/acre 2012 $/acre % ∆ 11 to 12 Continuous Corn271422371–12% Rotation Corn326495452–9% Rotation Soybeans287443400–10% Wheat194394246–38% Double Crop Soybeans122206247+20%
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Contribution Margin by Crop & Yield, 2012 Crops Low Yield ($/acre) Average Yield ($/acre) High Yield ($/acre) DC Wheat/Soybeans348493638 Rotation Corn310452619 Rotation Soybeans285400514 Continuous Corn241371525 Wheat183246308
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Contribution Margin by Rotation, 2012 1 Crops in Rotation Low Yield ($/acre) Average Yield ($/acre) High Yield ($/acre) Corn – Wheat/DC Beans329472628 Corn – Soybeans298426566 Soybean – Corn – C-Corn279408553 Continuous Corn241371525 1 Sum 2012 contribution margins for individual crops, then divide by years in rotation.
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Variable Costs Per Bushel 2010 – 2012 1 Rotation Low YieldAverage YieldHigh Yield $/Bushel 101112101112101112 Rotation Corn 2.432.783.222.152.472.831.862.142.44 Rotation Beans 4.464.795.283.734.084.503.313.614.00
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Fixed Costs Change, 2011 – 2012 (3000 Acre Farm Size) Rotation Low YieldAverage YieldHigh Yield $/Acre 1112% ∆1112% ∆1112% ∆ Machinery Overhead 6877+13%7282+14%7484+14% Family & Hired Labor 3845+18%3845+18%3845+18% Land Rent 138146+6%167189+13%208239+15% Total Overhead 244268+10%277316+14%320368+15%
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Cost Structure – Rotation Corn 2012 Rotation Corn Low Yield Average Yield High Yield % of Total Cost % of Total Cost Variable Cost 615957 Fixed Cost 394143 Fixed costs are for 3000 acre farm. Assumes fixed costs are shared equally between corn and beans.
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Cost Structure – Rotation Beans 2012 Rotation Corn Low Yield Average Yield High Yield % of Total Cost % of Total Cost Variable Cost 464341 Fixed Cost 545759 Fixed costs are for 3000 acre farm. Assumes fixed costs are shared equally between corn and beans.
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Total Costs Per Bushel 2010 – 2012 1 Rotation Low YieldAverage YieldHigh Yield $/Bushel 101112101112101112 Rotation Corn 4.314.675.283.894.194.773.543.804.32 Rotation Beans 10.5611.0511.519.409.7310.358.759.039.66 1 Overhead costs based on corn–bean rotation on 3000 acre farm.
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Source: Keep in Mind Family Living When Doing Crop Budgets, farmdocDAILY, February 17, 2012.
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Returns Above Total Costs Per Acre, 2010 – 2012 Acres & Rotation Low YieldAverage YieldHigh Yield $/Acre 101112101112101112 1000-acre corn-bean -43818191829077279184 3000-acre corn-bean -81154750212130114315224
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Management Implications –Input prices increase sending variable costs higher –Overhead costs will increase in response to strong contribution margins – machinery overhead, family living/labor expenses, and land rent –Potential for economic profit –Budget reflects strong demand for corn which may influence rotation decisions –Risk of margin squeeze/margin decline likely will be significant because of price volatility
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Questions, Comments Purdue University is an Equal Opportunity/Equal Access institution.
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