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Agronomics & Economics Crop Management Decisions

Need Both!

Roy Arnott, P.Ag.

Farm Management Specialist

Anastasia Kubinec, M.Sc., P.Ag., CCA

Manager - Crops Industry

• Doing your cost of production(per bushel sold) for your own farm is the starting point for profitability.

• Chasing short term profitability at the expense of good agronomy increases your risk and will likely cost you more in the long run.

• Each year is different! Profitability and risk is dependent on the relationship between yield/price/costs with your financial situation. (Plan for Prosperity)

What we already know…

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

$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 riskaka. = “AFW”

$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 riskaka. = “AFW”

Market price per bushel

$11.25 Mkt price per bushel minus $10.20 B/E per bushel = $1.05 Reward

Utilizing COPs in Crop Rotations• Soybean on Soybean = 93%• Soybean on Spr. Wheat = 102%

-/+ 9% or $38/ac

• Oat on Canola = 101%• Oat on Soybean = 108%

-/+ 7% or $24/ac

Utilizing COPs in Crop Rotations• Planted crop on specific stubbles can

increase/decrease yield, because of:– Change in disease pressure– Change in weed establishment/spectrum– Biological or physical interactions– Moisture conservation/use

Crop Rotation = Yield Opportunity?

Source: Yield response of Manitoba crops sown on large (>120 acre) fields of various previous crop (stubble) in rotation 2010-2016 (MASC)

Previous Crop

Crop Planted

SpringWheat Oat Barley Canola Flax

FieldPea Soybean Sunflower

Grain Corn

Sp Wheat 85 94 95 102 104 103 102 103 96

Oat 91 79 78 95 92 93 100 102 99

Barley 88 90 82 100 102 91 100 96 92

Canola 100 101 103 87 86 98 100 92 99

Flax 96 90 107 103 83 91 98 88 85

Field Pea 102 110 106 104 148 - 95 - 98

Soybean 107 108 107 103 107 90 93 103 103

Sunflower 102 102 106 90 99 85 93 82 97

Grain Corn 98 110 94 110 - 90 101 115 88Yield/ac 50 bu 101 bu 65 bu 36 bu 21 bu 38 bu 35 bu 1607 lb 121 bu

Economic Opportunity – Crop Sequence

Year 1 Year 2 Year 3 Year 4 Year 5Economic Returns

1 Sp.Wheat Canola Sp.Wheat Canola Sp.Wheat $142.56+2% 0% +2% 0%

2 Soybean Corn Soybean Corn Soybean $132.02

+3% +1% +3% +1%3 Canola Oat Soybean Canola Oat $152.75

+1% 0% +3% +1%

4 Soybean Corn Canola Sp.Wheat Field Pea $134.68

+3% +10% 0% +3%

Note: Yields based on 10yr average from MASC Harvest Acreage Report

Economic Opportunity – Crop Sequence

Year 1 Year 2 Year 3 Year 4 Year 5Economic Returns

1 Sp.Wheat Canola Sp.Wheat Canola Sp.Wheat $142.56+2% 0% +2% 0% $264.40

2 Soybean Corn Soybean Corn Soybean $132.02

+3% +1% +3% +1% $174.403 Canola Oat Soybean Canola Oat $152.75

+1% 0% +3% +1% $241.704 Soybean Corn Canola Sp.Wheat Field Pea $134.68

+3% +10% 0% +3% $234.60

Note: Yields based on 10yr average from MASC Harvested Acreage ReportYields based on 2017 MASC Harvested Acreage Report

Disease Pressures

Year 1 Year 2 Year 3 Year 4 Year 5Economic Returns

1 Sp.Wheat Canola Sp.Wheat Canola Sp.Wheat $142.56+2% -5% 0% -5% +2% -10% 0%-10% $132.04

2 Soybean Corn Soybean Corn Soybean $132.02

+3% -5% +1% -5% +3% -10% +1% -10% $122.383 Canola Oat Soybean Canola Oat $152.75

+1% 0% +3% +1%

4 Soybean Corn Canola Sp.Wheat Field Pea $134.68

+3% +10% 0% +3%

Note: Yields based on 10yr average from MASC Harvested Acreage Report

Slippery Slope

Economic Opportunity

Weeds – Incidence, Selection

Year 1 Year 2 Year 3 Year 4 Year 5Weed Issues

1 Sp.Wheat Canola Sp.Wheat Canola Sp.Wheat Gp1 HTGp1,4 LL/Gp1 Gp1,4 LL/Gp1 Gp1,4 WO/GF

2 Soybean Corn Soybean Corn Soybean RR HT Kochia

RR RR RR RR RR Fleabane3 Canola Oat Soybean Canola Oat ?

RR Gp 2,4*,6 RR LL/Gp1 Gp 4,6

4 Soybean Corn Canola Sp.Wheat Field Pea ?

RR RR LL/Gp1 Gp 2,4,6 Gp 1,4, 14

Slippery Slope

Economic Opportunity

Nitrogen Efficiency Based on Application Time and Placement

Time and Method of Application Relative ValuesSpring Broadcast 100%Spring Banded 120%Fall Broadcast 80%Fall Banded 100%

Source: MB Ag Soil Fertility Guide, 2007

Price vs Cost - Fertilizer Pricing• 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?

• 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

• Question: Is fertilizer and expense or an investment?

• Investment - provides a return over what you’ve paid.

• Expense – does not provide a return over what you’ve paid.

Time of Seeding

40

60

80

100

120

01/05 02/05 03/05 04/05 01/06 02/06 03/06

Spr. Wht Canola Field Pea

Corn Sunflower Soybean

% P

oten

tial

Yiel

d

Seeding Date (week/month)

Reseeding Decision Tool - Canola*** Enter/select changes to items in BLUE only ***

Farm Information:MASC - Risk Area RA #2MASC - Soil Zone EMASC - Individual Productivity Index (IPI) 1.00MASC AgriInsurance Coverage level 80%Calculated MASC Probable Yield (bu/ac) 34.6Original Crop CanolaReseeded Crop CanolaEstimated Market Price ($/bu) $10.89

Damaged Canola Plant Stand Evaluation: Plants/m2

Field Sample Plant Counts/m2 15 * enter up to (5) plant counts in the boxes to the right

* leave entries blank if less than (5) counts were taken

* 10.8 plants/m 2 = approx. 1 plant/ft 2

Average Plant Count/m2 15.0Plant Count - Yield Factor 0.75Estimated Yield (bu/ac) 26.0Estimated Gross Revenue ($/ac) $282.60

Reseeding Decision Tool - Canola

Canola Reseeding Evaluation: Reseed Date 1st week JuneDate - Yield Factor 0.8953Estimated Reseed Yield (bu/ac) 31.0Estimated AgriInsurance Reseeding Indemnity ($/ac) $75.36Estimated Seed Company Reimbursement ($/ac) $0.00Reseed Seed Costs ($/ac) $60.00Reseed Machinery Costs ($/ac) $15.00Estimated Gross Revenue ($/ac) $337.95 (net reseeding indemnity, reimbursements & expenses)

Estimated Benefit (Cost) of Reseed Decision ($/ac) $55.35

Pest Risk Models and Tools• Difficult to know everything that is happening

on the farm or in a region• Suite of risk maps or calculators can provide

background for economic decisions– Pest presence– Risk maps based on environmental factors

*** Enter/select changes to items in BLUE only ***

Risk Factor Possible Answers Risk Points

One to two years 10

Low (1% to 10%) 5

Normal 5

Less than 10 mm (0.4") 0

Variable 10

Low Numbers 10

Estimated Canola Yield 40 bu/acEstimated Price $10.75 $/bu

Estimated Fungicide Cost $21.88 $/acreEstimated Application Cost $8.00 $/acre

Number of Years Since last Canola Crop

Disease Incidence in Last Host

Crop Density

Rain in the Last Two Weeks

Weather Forecast

Regional Risk for Apothecia Development

Sclerotinia Treatment Decision Tool

Sclerotinia Treatment Decision Tool

Low HighPotential Infection Range 15% 25%

Potential $ Return/acre $2.37 $23.87Potential Return on Investment 8% 80%

Profit Probability

Spray Decision -

Sclerotinia Treatment Profitability Analysis

Likely Beneficial to Spray

100%

Created and maintained by Manitoba Agriculture Farm Management December, 2017Darren Bond Roy ArnottFarm Management Specialist Farm Management Specialist

Analysis specific to your own farm

What If? Printed: 2

Crop Price (Change %, +/-) 0%Crop Yield (Change %, +/-) 0%Fuel Cost (Change %, +/-) 0%

Fertilizer Cost (Change %, +/-) 0%Added Machinery Lease Annual Payment ($) $0

Added Machinery Purchase Annual Payment ($) $0Acreage Change - Land Purchase (Additional Annual Payment) $0 0 Acres Purchased

Acreage Change - Land Sale (Reduced Annual Payment) $0 0 Acres SoldAcreage Change - Land Rental Payments Per Acre (+/-) $0 0 Acres (+/-)

Land Rental Rate (Change $/acre, +/-) $0Hired Labour Cost (Change +/- $) $0

Owner Withdrawl (Change +/- $) $0Canadian Dollar Exchange Rate - USD (Change $, +/-) $0.00 (0 cent change from current value, affects fertilizer cost and grain mark

ReseDefau

Cropplan – What If? Analyzer

Calculates the impact of the ‘what if’ changes on costs, revenues and marginal returns.

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)

Obviously you’re telling me…• Those who produce the most, profit

the most.• Before seeding, compare crops for

profit probability and agronomic risks.

• It’s vital to know the risks andrewards of the different crops.

• Using good agronomy & good economics, the greater your chances are for profitability.

Questions ?

For more informationVisit our website:

www.manitoba.ca/agriculture

Follow us on Twitter: @MBGovAg

View our videos on YouTube: www.youtube.com/ManitobaAgriculture