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The Costs of Growing Wheat Around the World: A Look at agri benchmark Typical Farms
Tanja MöllmannThünen Institute of Farm Economics
November 13th 2015Agritechnica, Hannover
Outline
1. What is agri benchmark?
2. Global Wheat Production
3. agri benchmark Typical Farms
4. Case Study of: 8 farms
[RU, UA, PL, DE, US, CA, AR, AU]
Let’s grow together
1. Understanding growers needs and constraints enables you to improve products and services.
2. Understanding trends in global crop production allows you to adjust strategies.
3. Understanding agronomical and economic drivers of current production systems is the basis for innovations.
4. Understanding strengths and weaknesses of production systems from a global perspective makes it possible to take profitable decisions.
Who we are and what we do
1. agri benchmark is a global, non-profit network of agricultural economists, advisors, producers and specialists in key sectors of the value chains.
2. We use internationally standardized methods to analyze farms, production systems and their profitability.
3. We combine our farm-level knowledge with our expertise in international commodity markets and value chains.
4. Thereby we are able to provide scientifically consistent and soundly based answers on strategic issues to decision makers in agribusiness, policy and farming.
Present in all major countries and crops
Crop coverage :CornSoybeansWheatSugar beetRiceRapeseedOatsRye(Malting) barleySunflowerSorghumCottonPeasBeansPalm oilSugar cane
Countries participating in agri benchmark Cash Crop
Countries to come online 2015/16
Priorities for new partnerships
Major clients and research partners
Outline
Nov 10th 2015Elizabeth Lunik
1. What is agri benchmark?2. Global Wheat Production3. agri benchmark Typical Farms4. Case Study of: 8 farms [RU,UA,PL,DK,US,CA,AR,AU]
Slide 7
Production by Major Wheat Country/Region2011-12 to 2015-16
0,00
20,00
40,00
60,00
80,00
100,00
120,00
140,00
160,00
Mill
ion
Met
ric T
ons
2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 Proj.
USDA – WASDE- June 10, 2015 & PSD Custom QueryPage 8
Exports by Major Export Country/Region2011-12 to 2015-16
0,00
5,00
10,00
15,00
20,00
25,00
30,00
35,00
40,00
Mill
ion
Met
ric T
ons
2011/2012 2012/2013 2013/2014 2014/2015 Proj. 2015/2016 Proj.
USDA – WASDE- June 10, 2015 & PSD Custom Query
Page 9
Changes in wheat acreage (2000-03 = 100)
1. Important wheat producing countries reducewheat acreage (AR, CN, US, CA, ZA)
2. Slight expansion in wheat in RU, KAZ, BR.3. Many African countries increased wheat acreage
– some rather strongly.
Source: FAOStat 2014
Page 10
Changes in wheat yields (2000-03 = 100)
1. Increases in yield more or less everywhere.2. Strong upward trend in BR, CA, moderately in
CN, AU, US3. A few decreases in FR, UK, NO, SE.
Source: FAOStat 2014
Page 11
Conclusions re. global developments in wheat
Source: FAOStat 2014
(1) Globally wheat acreage is shrinking – in particular in Central Europe, US, CA, CN.
(2) Growth in acreage just in RU, KZ, AU, BR and some African countries.
(3) Yield is still growing – however only modest increases ( app. 1% p.a.) in US, RU, KZ. Strong growth: AU, CN, BR, CA and many African countries.
(4) Declining yields: UK and F
(5) Russia only modest increases in acreage and yields (despite a very low starting point).
Page 12
Outline
1. What is agri benchmark?2. Global Wheat Production3. agri benchmark Typical Farms4. Case Study of: 8 farms [RU,UA,PL,DK,US,CA,AR,AU]
agri benchmark Typical Farms
X
X
X
X XX
X = countries with agri benchmark typical farms which produced wheat in 2014
Source of base map: International Maize and Wheat Improvement Center (CIMMYT)
XX
XXX
X
X XX
agri benchmark typical farm approach
A typical farm… represents the origin of a major share of the national
output in a given crop is defined by a certain production system and a
combination (if any) of enterprises has certain structural features re. ownership of land
as well as labor organization (family vs. hired) is regularly being re-assessed to track changes
Data is jointly gathered from partners, regional advisors and growers during Focus Group discussions.Basis: Standard operating procedure (SOP).
Page 15
Percent of crop land in wheat for agri benchmark representative farms, 2014
0% 10% 20% 30% 40% 50% 60% 70% 80%
US1215INSZA1600EFS
AR900WBAFR110ALS
DK1300SL*UA7100PO*FR110VGAV
CZ4000JC*US1000ND
BR65PRRO6500ILPL730WOAR330ZN
HU1100TCUY360CEN
PL420POJP45HO
UA2600WUUY292SW
PL2100ST*AU4000WB*
DE160UE*SE445SK
CZ1200JM*DE250KAB
CA6000SASCA1100NWM
FR230PICB*DK605FYN
RU20000BSUK310WASH
UK440SUFFDE1100VP
DE360OW*UA2000FA
CA2000RRVCA2000SASAR700SBA
DE120HISE570LAV
UK800CAM*DE1300MB*
EUEASTNO. AMERICASO. HEMISPHERE
Page 16
Wheat yields, 2014 (t/ha)
0,0 2,0 4,0 6,0 8,0 10,0 12,0
UY360CENAU4000WB*
BR65PRUY292SW
CA6000SASZA1600EFSCA2000SASAR900WBA
CA1100NWMAR700SBA
AR330ZNUS1000ND
RU20000BSCA2000RRVUS1215INS
UA2600WUCZ4000JC*
JP45HORO6500IL
HU1100TCPL420PO
UA7100PO*CZ1200JM*
FR110VGAVSE570LAV
UA2000FASE445SK
PL730WOFR110ALS
UK800CAM*PL2100ST*DE1100VP
DE360OW*UK440SUFFDK605FYN
DE120HIDE250KABDE160UE*
DE1300MB*FR230PICB*DK1300SL*
UK310WASH
EUEASTNO. AMERICASO. HEMISPHERE
Page 17
Wheat price, 2014 (USD/t)
0 50 100 150 200 250 300 350
AR900WBAAR330ZN
AR700SBAUY360CENUY292SW
RU20000BSUS1215INSUA2000FA
CA2000SASPL420PO
CA2000RRVUK440SUFFDK1300SL*
UA2600WUUK310WASHFR230PICB*
FR110ALSFR110VGAV
CZ4000JC*UK800CAM*
US1000NDCA1100NWM
RO6500ILHU1100TC
CZ1200JM*DK605FYNDE250KABPL730WO
PL2100ST*DE1300MB*
DE160UE*SE570LAVDE1100VP
SE445SKAU4000WB*
DE360OW*UA7100PO*
DE120HICA6000SAS
BR65PRZA1600EFS
Summer Wheat
Durum
Summer WheatSummer Wheat
Summer Wheat
Summer Wheat
EUEASTNO. AMERICASO. HEMISPHERE
Page 18
Outline
1. What is agri benchmark?2. Global Wheat Production3. agri benchmark Typical Farms4. Case Study of: 8 farms [RU,UA,PL,DE,US,CA,AR,AU]
Wheat yield of selected farms, 2014 (t/ha)
High yielding systems vs. low yielding systems
Direct Costs, 2014 (EUR/t)
Cost advantages in RU and UAAU: high herbicide costs due to increasing resistancy problems
Operating Costs, 2014 (EUR/t)
AU: high labor costAR: major share of operations done by contractorRU: high machinery cost
Total Costs and revenues, 2014 (EUR/ha)
Profitable wheat production in 2014 (except AR farm) Big differences in total cost of production on per ha basis (RU/AU: 300€/ha vs. DE 1600€/ha)
Total Costs and revenues, 2014 (EUR/t)
Cash cost between 60€ and 120€ per tonneRU: advantages in land and labor costs
Typical farm Argentina, 2010-2014 (EUR/ha)
Example Argentinian farm (South of Buenos Aires)Profitable wheat production in previous years on EUR basis – consider exchange rate effect(!)
On farm competitiveness:Typical farm Argentina, 2014 (EUR/ha)
On farm competitiveness of different crops: Corn and soybeans are more profitable in 2014
Case Study: Summary of Cost of Production
Russia and Ukraine farms have a strong cost advantage in:• Fertilizer• Pesticides• Land• Labor (after Argentina and Canada)
U.S. farm (North Dakota) has high costs in:• Fertilizer• Crop insurance• Land
Australia farm has high cost per ton produced:• Herbicides – resistance problem• Machinery• Family labor
Cost of Production - Continued Germany and Poland farms have high costs on a per ha basis:• Direct cost (all inputs)• Landcost
Global perspective: German typical farm is competitive (per t basis)
Argentina farm substituted contractor cost for machinery and labor costs – wheat increasing on farm competitiveness
Carefully consider exchange rate effects!
Knowledge is our Business
Tanja Möllmann- Member of agri benchmark Cash Crop team -
Thünen Institute of Farm EconomicsBundesallee 50, 38116 BraunschweigGermany
phone +49 - 531-596-5119mobile +49- 1604762272email: [email protected]: www.agribenchmark.org
www.ti.bund.de
Thank you for your interest in agri benchmark.
Knowledge is our business
