Agronomics & Economics Crop Management Decisions Need Both!

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1 Agronomics & Economics Crop Management Decisions Need Both! Roy Arnott, P.Ag. Farm Management Specialist Anastasia Kubinec, M.Sc., P.Ag., CCA Manager - Crops Industry

2 What we already know 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)

13 $ per acre 80% insurance coverage per acre / 40 bu per acre = $8.08 covered risk per bushel

14 Breakeven price per bushel $10.20 B/E price per bushel minus $8.08 covered risk per bushel = exposed risk aka. = AFW $ per acre 80% insurance coverage per acre / 40 bu per acre = $8.08 covered risk per bushel

15 Market price per bushel $11.25 Mkt price per bushel minus $10.20 B/E per bushel = $1.05 Reward Breakeven price per bushel $10.20 B/E price per bushel minus $8.08 covered risk per bushel = exposed risk aka. = AFW $ per acre 80% insurance coverage per acre / 40 bu per acre = $8.08 covered risk per bushel

17 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

18 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

19 Crop Rotation = Yield Opportunity? Crop Planted Previous Crop Spring Wheat Oat Barley Canola Flax Field Pea Soybean Sunflower Grain Corn Sp Wheat Oat Barley Canola Flax Field Pea Soybean Sunflower Grain Corn Yield/ac 50 bu 101 bu 65 bu 36 bu 21 bu 38 bu 35 bu 1607 lb 121 bu Source: Yield response of Manitoba crops sown on large (>120 acre) fields of various previous crop (stubble) in rotation (MASC)

20 Economic Opportunity Crop Sequence Economic Year 1 Year 2 Year 3 Year 4 Year 5 Returns 1 Sp.Wheat Canola Sp.Wheat Canola Sp.Wheat $ % 0% +2% 0% 2 Soybean Corn Soybean Corn Soybean $ % +1% +3% +1% 3 Canola Oat Soybean Canola Oat $ % 0% +3% +1% 4 Soybean Corn Canola Sp.Wheat Field Pea $ % +10% 0% +3% Note: Yields based on 10yr average from MASC Harvest Acreage Report

21 Economic Opportunity Crop Sequence Year 1 Year 2 Year 3 Year 4 Year 5 Economic Returns 1 Sp.Wheat Canola Sp.Wheat Canola Sp.Wheat $ % 0% +2% 0% $ Soybean Corn Soybean Corn Soybean $ % +1% +3% +1% $ Canola Oat Soybean Canola Oat $ % 0% +3% +1% $ Soybean Corn Canola Sp.Wheat Field Pea $ % +10% 0% +3% $ Note: Yields based on 10yr average from MASC Harvested Acreage Report Yields based on 2017 MASC Harvested Acreage Report

22 Disease Pressures Economic Year 1 Year 2 Year 3 Year 4 Year 5 Returns 1 Sp.Wheat Canola Sp.Wheat Canola Sp.Wheat $ Slippery Slope +2% -5% 0% -5% +2% -10% 0%-10% $ Soybean Corn Soybean Corn Soybean $ % -5% +1% -5% +3% -10% +1% -10% $ Canola Oat Soybean Canola Oat $ % 0% +3% +1% Economic 4 Opportunity Soybean Corn Canola Sp.Wheat Field Pea $ % +10% 0% +3% Note: Yields based on 10yr average from MASC Harvested Acreage Report

23 Weeds Incidence, Selection Year 1 Year 2 Year 3 Year 4 Year 5 Weed Issues 1 Sp.Wheat Canola Sp.Wheat Canola Sp.Wheat Gp1 HT Gp1,4 Slippery Slope LL/Gp1 Gp1,4 LL/Gp1 Gp1,4 WO/GF 2 Soybean Corn Soybean Corn Soybean RR HT Kochia RR RR RR RR RR Fleabane 3 Canola Oat Soybean Canola Oat? RR Gp 2,4*,6 Economic RR LL/Gp1 Gp 4,6 Opportunity 4 Soybean Corn Canola Sp.Wheat Field Pea? RR RR LL/Gp1 Gp 2,4,6 Gp 1,4, 14

24 Nitrogen Efficiency Based on Application Time and Placement Time and Method of Application Relative Values Spring Broadcast 100% Spring Banded 120% Fall Broadcast 80% Fall Banded 100% Source: MB Ag Soil Fertility Guide, 2007

25 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.

28 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.

29 Time of Seeding 120 Spr. Wht Canola Field Pea Corn Sunflower Soybean 100 % Potential Yield /05 02/05 03/05 04/05 01/06 02/06 03/06 Seeding Date (week/month)

31 Reseeding Decision Tool - Canola *** Enter/select changes to items in BLUE only *** Farm Information: MASC - Risk Area RA #2 MASC - Soil Zone E MASC - Individual Productivity Index (IPI) 1.00 MASC AgriInsurance Coverage level 80% Calculated MASC Probable Yield (bu/ac) 34.6 Original Crop Canola Reseeded Crop Canola Estimated Market Price ($/bu) $10.89 Damaged Canola Plant Stand Evaluation: Plants/m 2 Field Sample Plant Counts/m 2 15 * enter up to (5) plant counts in the boxes to the right * leave entries blank if less than (5) counts were taken * 10.8 plants/m 2 = approx. 1 plant/ft 2 Average Plant Count/m Plant Count - Yield Factor 0.75 Estimated Yield (bu/ac) 26.0 Estimated Gross Revenue ($/ac) $282.60

32 Reseeding Decision Tool - Canola Canola Reseeding Evaluation: Reseed Date 1st week June Date - Yield Factor Estimated Reseed Yield (bu/ac) 31.0 Estimated AgriInsurance Reseeding Indemnity ($/ac) $75.36 Estimated Seed Company Reimbursement ($/ac) $0.00 Reseed Seed Costs ($/ac) $60.00 Reseed Machinery Costs ($/ac) $15.00 Estimated Gross Revenue ($/ac) $ (net reseeding indemnity, reimbursements & expenses) Estimated Benefit (Cost) of Reseed Decision ($/ac) $55.35

33 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

37 Sclerotinia Treatment Decision Tool *** Enter/select changes to items in BLUE only *** Risk Factor Possible Answers Risk Points Number of Years Since last Canola Crop One to two years 10 Disease Incidence in Last Host Low (1% to 10%) 5 Crop Density Normal 5 Rain in the Last Two Weeks Less than 10 mm (0.4") 0 Weather Forecast Regional Risk for Apothecia Development Variable 10 Low Numbers 10 Estimated Canola Yield 40 bu/ac Estimated Price $10.75 $/bu Estimated Fungicide Cost $21.88 $/acre Estimated Application Cost $8.00 $/acre

38 Sclerotinia Treatment Decision Tool Sclerotinia Treatment Profitability Analysis Low High Potential Infection Range 15% 25% Potential $ Return/acre $2.37 $23.87 Potential Return on Investment 8% 80% Profit Probability 100% Spray Decision - Likely Beneficial to Spray Created and maintained by Manitoba Agriculture Farm Management December, 2017 Roy Arnott Darren Bond Farm Management Specialist Farm Management Specialist

39 Analysis specific to your own farm

40 Cropplan What If? Analyzer What If? Printed: 2 Crop Price (Change %, +/-) 0% Crop Yield (Change %, +/-) 0% Fuel Cost (Change %, +/-) 0% Rese Fertilizer Cost (Change %, +/-) 0% Defau Added Machinery Lease Annual Payment ($) $0 Added Machinery Purchase Annual Payment ($) $0 Acreage Change - Land Purchase (Additional Annual Payment) $0 0 Acres Purchased Acreage Change - Land Sale (Reduced Annual Payment) $0 0 Acres Sold Acreage Change - Land Rental Payments Per Acre (+/-) $0 0 Acres (+/-) Land Rental Rate (Change $/acre, +/-) $0 Hired Labour Cost (Change +/- $) $0 Owner Withdrawl (Change +/- $) $0 Canadian Dollar Exchange Rate - USD (Change $, +/-) $0.00 (0 cent change from current value, affects fertilizer cost and grain mark Calculates the impact of the what if changes on costs, revenues and marginal returns.

41 Farm Software & Worksheets (Crops) griculture/businessandeconomics/financialmanagement/farmsoftware-andworksheets.html Farm Machinery Custom & Rental Rate Guide Calculator /17 Crop Land Purchase Values 2017 Crop Land Rental Rate Crop Share Lease 2017 FertPlan 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.

42 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 and rewards of the different crops. Using good agronomy & good economics, the greater your chances are for profitability.

Questions? For more information Visit our website: www.manitoba.

43 Questions? For more information Visit our website: Follow us on View our videos on YouTube:

Crop Production Costs For 2017 (& Other Stuff)

Crop Production Costs For 2017 (& Other Stuff) BASA AGM, Cartwright December 12, 2016............................... Roy Arnott, P.Ag. Farm Management Specialist 204-523-6424 roy.arnott@gov.mb.ca Planning