Corn Production in Eastern Europe: A Challenge for Western Europe?

Transcription

1 Institute of Farm Economics Corn Production in Eastern Europe: A Challenge for Western Europe? CRPV Workshop on Grains, Bologna, Dr. Yelto Zimmer, Head of Cash Crop Team at von Thünen Institute Sponsored by

2 Content 1. What is agri benchmark Cash Crop? 2. Economics in Corn production 3. Conclusions YZ / European Corn Production / / 2

3 Ideas behind the Network Understand and demonstrate how the world of farming looks like Explore reactions of the global farming community re. innovations & external shocks Identify competitive position of single crops on-farm and of national farming in general YZ / European Corn Production / / 3

4 The agri benchmark project What is agri benchmark? A global research network of agricultural economists advisors and farmers Key idea Merge data + experts globally Methods create typical farms validate data with panel s (scientists, growers, advisors) establish a globally uniform data base combine farm level results with ag sector statistics YZ / European Corn Production / / 4

5 Institutions of agri benchmark 1 Joint coordination by vti & DLG Scientific lead by public funded institution 2 Research partners in the countries Universities Public funded research centers Advisors 3 Customers Agribusiness companies & associations Policy makers National and international institutions YZ / European Corn Production / / 5

6 agri benchmark Cash Crop Scientific Partners Canada UK Czech Rep. USA/ Iowa USA / N. Dakota Italy France Russia Poland Brazil Argentina South Africa Sweden Denmark Ukraine Hungary Romania China Malaysia Australia YZ / European Corn Production / / 6

7 Countries in agri benchmark Cash Crop Countries participating in agri benchmark Cash Crop Priorities for new countries YZ / European Corn Production / / 7

8 Annual agri benchmark Cash Crop Conference Discussion of results & strategies Explain to the network how and why Discuss strategies for adjustments on farm level Get to know how local arable production looks like Joint decision on methodological issues Evolution of standard operating procedure Joint decision on further network developments Start of new activities (f.i. snap shot) YZ / European Corn Production / / 8

9 What is a Typical Farm A typical farm represents the origin of a major share of the national output in a given crop can not be identified with an existing farm 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) A standard operating procedure (SOP) to define typical farms was developed and is used by all partners involved. YZ / European Corn Production / / 9

10 Selection of Regions Hot spots in wheat production Share of wheat acreage in total arable land (in %) < % > 35 YZ / European Corn Production / / 10

11 Starting Point: Production System UA2250BT Soybeans following a Forage Crop/ Conventional Tillage March April May June July August September October D C S Hv H I F H P K N (Ca) Abbreviations Machinery: S = Seeding C = Cultivator D = Disc Harrow Pl = Plough Hv = Harvest R = Rolling vegetation period Plant Protection: I = Insecticide H = Herbicide F = Fungicide Gr = Growth Regulator Fertilizer: N = Nitrogen P = Phosphorus K = Potassium Ca = Lime YZ / European Corn Production / / 11

12 Content 1. What is agri benchmark Cash Crop? 2. Economics in Corn production 3. Conclusions YZ / European Corn Production / / 12

13 Corn: yields (t/ha) AR330ZN AR700SBA BR1300MT BR195PR CZ1200JM* CZ4000JC* FR150BI HU1100TC HU115NGP IT240ER* RO600TR* RU10000BS* UA2500ZH* US700IA US810WNE* US900ND SH EU East NA YZ / European Corn Production / / 13

14 Seeds, N, P, K Corn: Crop establishment cost (EUR/ha) N; Pot. Seeds; N Seeds; N; Herb. Seeds; N Seeds Nitrogen Phosphorus Potassium Herbicides Fungicides Insecticides Seeds; Herb AR330ZN AR700SBA BR1300MT BR195PR CZ1200JM* CZ4000JC* FR150BI HU1100TC HU115NGP IT240ER* RO600TR* RU10000BS* UA2500ZH* US700IA US810WNE* US900ND SH EU East NA YZ / European Corn Production / / 14

15 AR330ZN AR700SBA BR1300MT BR195PR CZ1200JM* CZ4000JC* FR150BI HU1100TC HU115NGP IT240ER* RO600TR* RU10000BS* UA2500ZH* US700IA US810WNE* US900ND Corn: Crop establishment cost (EUR/t) Insecticides EUR/t Fungicides Herbicides Potassium Phosphorus Nitrogen Seeds SH EU East NA YZ / European Corn Production / / 15

16 Conclusions crop establishment cost corn Argentinian and US farms together with Italian and Hungarian farm most competitive (~ 30 EUR/t). Due differences in yield, variation in cost per hectare becomes much smaller in cost per tonne. However, most high cost producers (EUR/ha) are also high on a EUR/t basis. Exception: US-Nebraska Low cost per hectare not necessarily low in cost per tonne (UA, RU). Soybeans as a previous crop very important for cost per tonne (CZ, RU, UA, USA). Very strong variation in seed cost per hectare. YZ / European Corn Production / / 16

17 Contractor: 200 EUR/ha 160 EUR/ha 120 Diesel 100 Corn operating cost (EUR/t) Machinery Contractor 80 Hired labor Family labor 60 Labor: Labor: 26 h/ha 32 h/ha 5,80 /h 4,70 /h Machinery Labor: 20 h/ha; 15 /h Labor: 23 h/ha; 24 /h Contractor Labor: 21 h/ha; 1,7 /h Maschinery 40 EUR/t Labor: 50 h/ha; 1,3 /h Labor: 5 h/ha; 13 /h Labor: 4 h/ha; 13 /h AR330ZN AR700SBA BR1300MT BR195PR CZ1200JM* CZ4000JC* FR150BI HU1100TC HU115NGP IT240ER* RO600TR* RU10000BS* UA2500ZH* US700IA US810WNE* US900ND SH EU East NA YZ / European Corn Production / / 17

18 Conclusions operating cost corn Low wage rates do not secure competitive cost level (CZ farms and RU) High wage rates allow very competitive cost level (US farms). Italian farm has (a) very high labor input and (b) the highest labor cost per hour. Contracting at AR farms is the success factor. Size in itself does not guarantee low machinery and labor cost YZ / European Corn Production / / 18

19 Corn: Key cost elements (EUR/ha) Land cost High land cost do not explain results ARG: 210 EUR/ha IT240: 490 EUR/ha US700IA: 370 EUR/ha Operating cost Direct cost AR330ZN AR700SBA BR1300MT BR195PR CZ1200JM* CZ4000JC* FR150BI HU1100TC HU115NGP IT240ER* RO600TR* RU10000BS* UA2500ZH* US700IA US810WNE* US900ND SH EU East NA YZ / European Corn Production / / 19

20 AR330ZN AR700SBA BR1300MT BR195PR CZ1200JM* CZ4000JC* FR150BI HU1100TC HU115NGP IT240ER* RO600TR* RU10000BS* UA2500ZH* US700IA US810WNE* US900ND Corn gross revenue & total cost (EUR/t) Opportunity cost Depreciation Cash cost Gross revenue SH EU East NA YZ / European Corn Production / / 20

21 Bottom line total cost and gross revenue While farms in the US and Latin America are profitable or close to it, many European farms are far away from break-even. French & Italian farm hardly cover cash cost. Ukraine might become a new powerhouse in corn production, Russia as well rather strong in cost. Problem for RU farm: Very low prices YZ / European Corn Production / / 21

22 Content 1. What is agri benchmark Cash Crop? 2. Economics in Corn production 3. Conclusions YZ / European Corn Production / / 22

23 Conclusions (I) (1) agri benchmark is able to provide reliable and detailed data on economics of crop production worldwide. (2) Current European corn production tends to face a competitive disadvantage relative to US and Latin American farm. Neither size nor wage rates or land cost are obvious and main causes. Key problems: low labor productivity and too little use of contractors. (3) The strength of US farms is lean labor input, AR farms are benefitting from contractor usage. (4) Proper managed Eastern European farms (RU, UA, RO) may become important players in future corn production. YZ / European Corn Production / / 23

24 Conclusions (II) (5) Not only European farms have to cope with high land prices but they get additional direct payments. (6) Due to significant differences in corn prices, cost is not the only item that matters. Especially AR farms have to be low cost producers because they face very low prices due to export taxes. YZ / European Corn Production / / 24

25 Knowledge is our Business Thank you for your interest Dr. Yelto Zimmer - Head of agri benchmark Cash Crop team - Institute of Farm Economics Johann Heinrich von Thünen-Institute Bundesallee 50, Braunschweig phone mobile yelto.zimmer@vti.bund.de internet YZ / European Corn Production / / 25