Special Crop Production Costs

Transcription

1 Guidelines for Estimating Special Crop Production Costs 2018 in Manitoba

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3 Guidelines For Estimating Special Crop Production Costs Date: January, 2018 The following budgets are estimates of the cost of producing selected special field crops in Manitoba. General Manitoba Agriculture recommendations are assumed in using fertilizers and chemical inputs. These figures provide an economic evaluation of the crops and estimated yields required to cover all costs. Costs include labour, investment and depreciation, but do not include management costs, nor do they necessarily represent the average cost of production in Manitoba. These budgets may be adjusted by putting in your own figures. As a producer you are encouraged to calculate your own costs of production for various crops. On each farm, costs and yields differ due to soil type, climate and agronomic practices. This tool is available as an Excel worksheet at: or at your local Manitoba Agriculture office. The Farm Machinery Custom and Rental Rate Guide is also available to help determine machinery costs. The CropPlan Production Cost Calculator is also available for producers to estimate the cash cost of producing field crops on their farm on an annual basis. CropPlan calculates marginal returns, breakeven yields, breakeven crop prices on total production and remaining unsold inventory, land and machinery cost analysis and cash based finanical ratios. Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry. Interpretation and use of this information is the responsibility of the user. If you need help with a budget, contact your local Manitoba Agriculture office.

4 Guidelines: Special Crop Production Costs 2 Special Crop Production Costs 2018 Guidelines (Dollars Per Acre) Hempseed Black Bean Kidney Bean Buckwheat Canaryseed Fababean Lentil Your Farm A. Operating Costs Seed & Treatment $50.00 $83.75 $ $25.00 $14.08 $39.60 $20.00 Fertilizer $44.98 $44.98 $44.98 $24.80 $38.78 $20.22 $11.53 Herbicide $38.82 $66.21 $66.21 $5.25 $13.53 $0.00 $16.00 Fungicide $0.00 $30.20 $0.00 $0.00 $9.91 $0.00 $14.38 Insecticide $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Fuel $16.73 $15.12 $14.77 $14.00 $15.69 $15.61 $13.68 Machinery Operating $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Machinery Lease $2.88 $2.88 $2.88 $2.88 $2.88 $2.88 $2.88 Rental and Custom $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Crop Insurance $30.91 $30.65 $38.71 $22.81 $18.62 $13.47 $24.98 Hail Insurance $10.08 $8.82 $8.82 $12.60 $5.04 $10.08 $7.56 Other Costs $7.75 $7.75 $7.75 $7.75 $7.75 $7.75 $7.75 Land Taxes $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 Drying Costs $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Interest on Operating $5.68 $7.88 $8.38 $3.50 $3.78 $3.37 $3.59 Total Operating $ $ $ $ $ $ $ B. Fixed Costs Land Investment Costs $64.68 $64.68 $64.68 $64.68 $64.68 $64.68 $64.68 Machinery Depreciation $45.71 $49.06 $49.06 $45.71 $45.71 $45.71 $45.71 Machinery Investment $18.76 $20.14 $20.14 $18.76 $18.76 $18.76 $18.76 Storage Costs $2.22 $4.02 $3.44 $2.10 $4.33 $5.82 $2.56 Total Fixed $ $ $ $ $ $ $ Total Operating & Fixed $ $ $ $ $ $ $ C. Labour $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 Total Costs $ $ $ $ $ $ $ Profitability Analysis Estimated Farmgate Target Price $ per unit $0.73 $0.33 $0.42 $13.00 $0.22 $0.09 $0.18 Premium $ per unit $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Target Yield per acre 700 1,725 1, ,550 2,500 1,100 Unit type lb lb lb bu lb lb lb Gross Revenue / acre $ $ $ $ $ $ $ Revenue Ranking Operating Expense Ratio 45.6% 56.8% 55.4% 73.6% 45.5% 61.3% 74.4% Marginal Returns Over Operating Costs $ $ $ $51.42 $ $87.02 $50.66 Over Operating & Fixed $ $ $ ($79.83) $52.47 ($47.96) ($81.05) Over Total Costs (Net Profit) $ $78.13 $ ($109.83) $22.47 ($77.96) ($111.05) Profitability Ranking Return on Investment (ROI) 29.63% 15.91% 21.28% (36.03%) 7.05% (25.73%) (35.93%) Return on Asset (ROA) 5.73% 4.73% 5.58% (0.69%) 3.12% 0.32% (0.71%) Breakeven Analysis Breakeven Price Per Unit Over Operating Costs $0.33 $0.19 $0.23 $9.57 $0.10 $0.06 $0.13 Over Operating & Fixed Costs $0.52 $0.27 $0.33 $18.32 $0.19 $0.11 $0.25 Over Total Costs $0.56 $0.28 $0.35 $20.32 $0.21 $0.12 $0.28 Breakeven Yield (Bu or lb.) Over Operating Costs Over Operating & Fixed Costs Over Total Costs Breakeven Yield Risk Ratio 130% 116% 121% 64% 107% 74% 64% (Target Yield per Acre / BE Yield) Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry. Interpretation and utilization of this information is the responsibility of the user.

5 Guidelines: Special Crop Production Costs 3 AgriInsurance Analysis Hempseed Black Bean Kidney Bean Buckwheat Canaryseed Fababean Lentil Your Farm AgriInsurance Insured Value $ $ $ $ $ $ $ Premium Cost (% of Insured) 9.0% 7.4% 7.9% 12.0% 7.3% 9.8% 10.2% Costs Not Covered By AgriInsurance Operating Costs $0.00 $0.00 $0.00 $0.00 $0.00 $1.18 $0.00 Operating & Fixed Costs $18.86 $45.53 $0.00 $84.57 $32.41 $ $33.05 Total Costs $48.86 $75.53 $20.76 $ $62.41 $ $63.05 AgriInsurance Risk Ratio (AgriInsurance Coverage / Cost) Operating Costs 148% 129% 143% 133% 165% 99% 167% Total Costs 88% 85% 96% 62% 45% Risk Ranking (Lower number indicates increasing risk) Risk & Sensitivity Analysis (Stress Test) Percent Market Price Change -10.0% Percent Crop Yield Change -5% Hempseed Black Bean Kidney Bean Buckwheat Canaryseed Fababean Lentil Your Farm Market Price ($ per unit) $0.66 $0.30 $0.38 $11.70 $0.20 $0.08 $0.16 Yield (per acre) Stress Test Scenario = Market Price Down 10%, and Crop Yield Down 5% Gross Revenue / acre $ $ $ $ $ $ $ Marginal Returns Over Operating Costs $ $ $ $20.22 $ $54.39 $21.95 Over Operating & Fixed $72.70 $25.66 $48.77 ($111.03) $3.12 ($80.58) ($109.76) Over Total Costs (Net Profit) $42.70 ($4.34) $18.77 ($141.03) ($26.88) ($110.58) ($139.76) Profitability Ranking Operating Expense Ratio 53.3% 66.4% 64.9% 87.7% 53.2% 71.7% 87.0% Acreage Analysis Hempseed Black Bean Kidney Bean Buckwheat Canaryseed Fababean Lentil Your Farm MASC Seeded Acreage 5 Year Average Acres 15,773 15,354 12,755 7,846 7,530 5,589 2,615 Acre Ranking Acres 27,296 22,409 8,136 5,645 4,283 8,379 2,681 Acre Ranking Note: This budget is only a guide and is not intended as an in depth study of the cost of production of this industry. Interpretation and utilization of this information is the responsibility of the user.

6 Guidelines: Special Crop Production Costs 4 $ Manitoba - Insured Value AgriInsurance Risk Analysis % 167% 1 $ % 129% 143% 133% 160% 140% $ % $ Per Acre $ % 85% 96% 62% 99% 100% Analysis of your AgriInsurance Coverage of Operating and Total Costs is an important step in Risk Management Planning for your farm. $ % 60% $ % 20% $0.00 0% Hempseed Black Bean Kidney Bean Buckwheat Canaryseed Fababean Lentil Insured Value Coverage of Operating Costs Coverage of Total Costs Manitoba Agriculture Manitoba Risk & Reward Analysis % 120% Analysis of ROI (Reward) and the associated AgriInsurance Coverage of Total Costs (Risk) is useful in comparing the profitability and cost efficiency alongside the production cost risk when evaluating crops to include in your rotation and is an important step in Risk Management Planning for your farm. 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% 96% 88% 85% 29.6% 15.9% 21.3% 62% -36.0% 7.1% -25.7% -35.9% 45% 100% 60% 40% 20% -40.0% Hempseed Black Bean Kidney Bean Buckwheat Canaryseed Fababean Lentil 0% Return on Investment (Reward) Coverage of Total Costs (Risk) Manitoba Agriculture 140% 120% 130% Manitoba Breakeven Yield Risk Ratio % 116% 107% 100% 60% 40% 64% 74% 64% Analysis of your Breakeven Yields compared to Target (or average) Yields gives an indication of how close to B/E ($0 profit = 100%) each crop in your rotation is if faced with potential production or market price challenges and is an important step in Risk Management Planning. 20% 0% Hempseed Black Bean Kidney Bean Buckwheat Canaryseed Fababean Lentil Target Yield as % of B/E Yield Manitoba Agriculture

7 Guidelines: Special Crop Production Costs 5 Seeding Rate Price Cost Crop per Acre per Unit per Acre Hempseed 20 lb $2.50 /lb $50.00 Black Bean 1.25 unit $67.00 /unit $83.75 Kidney Bean 1.4 unit $90.00 /unit $ Buckwheat 1.0 bu $25.00 /bu $25.00 Canaryseed 44 lb $0.32 /lb $14.08 Fababean 180 lb $0.22 /lb $39.60 Lentil 2.0 bu $10.00 /bu $20.00 Bulk Price Actual Nutrient Nitrogen Sulphur Fertilizer Type $/tonne $/lb Usage Usage Nitrogen: (urea) $440 $ % - Nitrogen: (NH3) $623 $ % - Nitrogen: (liquid) $283 $ % - Phosphorus: $634 $ Potash: $415 $ Sulphur: $426 $ % MES S15: $642 $ % Amount of Actual Pounds of Elements Applied Per Acre Nitrogen Phosphorus Potash Sulphur Total Crop lbs $/acre lbs $/acre lbs $/acre lbs $/acre $/acre Hempseed 80 $ $ $ $0.00 $44.98 Black Bean 80 $ $ $ $0.00 $44.98 Kidney Bean 80 $ $ $ $0.00 $44.98 Buckwheat 40 $ $ $ $0.00 $24.80 Canaryseed 70 $ $ $ $0.00 $38.78 Fababean 0 $ $ $ $8.69 $20.22 Lentil 0 $ $ $ $0.00 $11.53 * The fertilizer recommendation will vary depending on the soil type, climate and crop rotation. MB Ag. recommends that soil test sampling and analysis be conducted each year to produce a better baseline for fertility. It costs $1.00 to $2.00/acre for custom sampling and analysis. * For more information on fertilizer rates and recommendations - Nitrogen Rate Calculator * Note: phosphorus amounts are allotted to each crop in the above examples. Sometimes this amount may not be practical or safe to apply with the seed of some crops like soybean or canola. Options for meeting these needs and phosphorus balance through the rotation are provided at: Phosphorus Balance Calculator Weed Disease Insect Total Control Control Control Cost Crop $/acre $/acre $/acre $/acre Hempseed $38.82 $0.00 $0.00 $38.82 Black Bean $66.21 $30.20 $0.00 $96.41 Kidney Bean $66.21 $0.00 $0.00 $66.21 Buckwheat $5.25 $0.00 $0.00 $5.25 Canaryseed $13.53 $9.91 $0.00 $23.44 Fababean $0.00 $0.00 $0.00 $0.00 Lentil $16.00 $14.38 $0.00 $30.38 Note: Pre-emergent burn off and/or pre-harvest desiccation not included in weed control costs. Chemical costs do not include year end rebates or bundling discounts. Disease Control costs do not include custom application costs. Seed & Treatment Fertilizer Chemicals

8 Guidelines: Special Crop Production Costs 6 Operating Costs Interest Rate on Operating 5.00% Grain Hauling Land Taxes ($/acre) $15.00 Distance to storage 6 miles roundtrip Labour rate ($/hour) $20.00 Distance to market 45 miles roundtrip Machinery Operating ($/acre) $10.00 Grain truck fuel use 5 Miles per Imp. Gallon Other Costs ($/acre) $7.75 Grain truck size 475 bushels Fuel Cost ($/litre) $0.85 Operating Cost ($/Acre) Labour Crop* Hail Drying Storage Rental and Custom Costs Crop (hrs/acre) Fuel Insurance Insurance Costs $/acre** Seeding Application Swathing Harvest General Total Hempseed 1.5 $16.73 $30.91 $ $ $0.00 Black Bean 1.5 $15.12 $30.65 $ $ $0.00 Kidney Bean 1.5 $14.77 $38.71 $ $ $0.00 Buckwheat 1.5 $14.00 $22.81 $ $ $0.00 Canaryseed 1.5 $15.69 $18.62 $ $ $0.00 Fababean 1.5 $15.61 $13.47 $ $ $0.00 Lentil 1.5 $13.68 $24.98 $ $ $0.00 * Insured Value - Based on MASC Risk Areas 2, 5, 6, & 12 ** Storage costs are listed under Fixed Costs on the Summary Page. Field Fuel Usage Number of Field Operations & Litres Fuel Per Acre Per Operation Trucks L/acre Total cultivator or tandem disk high speed disk harrow or land roller air drill row planter SP sprayer swather combine 3/4 ton pickup grain hauling Crop L/acre Hempseed Black Bean Kidney Bean Buckwheat Canaryseed Fababean Lentil

9 Guidelines: Special Crop Production Costs 7 Fixed Costs Land value ($/acre) $2,800 Machinery Investment ($/acre) Land cost ($/acre) $64.68 Conventional Crop Equipment $ Conventional Crop acres 2,000 Special Crop Equipment $50.00 Special Crop acres 500 Machinery Depreciation cost ($/acre) Investment Rate 2.75% Conventional Crop Equipment $45.71 Machinery Residual Value 33.0% Special Crop Equipment $3.35 Machinery Useful Life (years) 10 Depreciation Rate 10.0% Machinery Investment cost ($/acre) Conventional Crop Equipment $18.76 Grain Storage Usage % Cost Special Crop Equipment $1.38 Non-aeration bins 25% $1.95 /bu Aeration bins 75% $2.45 /bu Machinery Lease cost ($/acre) $2.88 Conventional Crop Equipment Inventory and Current Values Market Grain Grain Market Grain Grain Power & Misc Equipment Value Usage % Allocation Harvest Equipment Value Usage % Allocation 4WD Tractor 475HP $300, % $300,000 Combine $400, % $400,000 MFWD Tractor 150HP $175, % $175,000 Swather 35 ft $125, % $125,000 2WD Tractor 60HP $40,000 75% $30,000 PTO Auger 13x70 $15, % $15,000 ATV Quad $10,000 75% $7,500 Auger 8x35 $4, % $4,000 Total $512,500 Total $544,000 Market Grain Grain Market Grain Grain Seeding, Tillage, Spraying Value Usage % Allocation Trucks & Trailers Value Usage % Allocation Cultivator $25, % $25,000 Tandem grain truck $100, % $100,000 Harrow 80ft $35, % $35,000 Grain cart $40, % $40,000 Air tank $75, % $75,000 5th wheel flatdeck $10, % $10,000 Air drill $125, % $125,000 $0 0% $0 SP sprayer $225, % $225,000 $0 0% $0 Rock picker $4, % $4,000 $0 0% $0 Water tanks $10, % $10,000 $0 0% $0 Total $499,000 $499,000 Total $150,000 Owned Equipment TOTAL $1,705,500 Special Crop Equipment Inventory and Current Values Market Grain Grain Market Grain Grain Seeding, Tillage, Spraying Value Usage % Allocation Harvest Equipment Value Usage % Allocation Planter $125, % $125,000 enter equipment here $0 0% $0 Total $125,000 Total $0 Special Equipment TOTAL $125,000 Annual Grain Grain Annual Grain Grain Seeding, Tillage, Spraying Lease Usage % Allocation Trucks & Trailers Lease Usage % Allocation enter equipment here $0 0% $0 3/4 ton pickup $9,600 75% $7,200 Total $0 $0 Total $7,200 Leased Equipment TOTAL $7,200 $2.88 per acre * Leased equipment costs are listed under Operating Costs on the Summary Page. Leased Equipment Inventory

10 Guidelines: Special Crop Production Costs 8 Fuel Costs: Includes fuel used for field work, trucking in inputs and trucking out production. Machinery Operating Costs: Includes costs for maintenance, repairs, licenses and insurance. Crop Insurance: (2017 rates) Insured Value coverage, $50/acre excess moisture Insurance, and additional hail insurance at $160/acre coverage for all crops. Coverage and costs based on MASC Risk Areas #2, 5, 6, and 12. Other Costs: Includes overhead expenses - hydro, telephone, accounting, buildings, supplies and insurance, etc. Interest On Operating: Land Investment Cost: Depreciation: Investment Cost: Other Assumptions Land Taxes: The average cost based on land tax assessment and mill rates of a sample of municipalities growing crops less provincial tax rebate. Interest charges on operating costs are calculated at 5% for six months. Land value are based on approximate average land values. Budget assumed 2.75% return on land investment Assumed 10% on machinery, 33% salvage value. Assumed 2.75% opportunity cost on machinery. Estimated Farmgate Values: Target crop prices are based on deferred delivery contract prices for fall Target yields are estimated based on 5 year MASC average yields plus 5%. Depreciation Cost = Original Cost - Salvage Value Useful Life Investment Cost = Original Cost + Salvage Value x Investment Rate 2 Storage Cost: Storage costs for each crop are based on estimated yields entered on the Summary page. Assumed a 10% depreciation cost and 2.75% investment cost. Farm storage requirements were assumed to cost $1.95/bushel for 25% of the storage and $2.45/bushel for 75% aerated storage. Example - Kidney Bean Non-Aeration Bins (25%) Depreciation: $47.94-$ years = $2.16 Investment: $47.94+$ x 2.75% $0.73 Sub-Total = $2.88 x 25% = $0.72 Aeration Bins (75%) Depreciation: $60.23-$ years = $2.71 Investment: $60.23+$ x 2.75% $0.91 Sub-Total = $3.62 x 75% = $2.72 Total $3.44 Profitability, Breakeven & Risk Analysis Formulas: Gross Revenue = Price per unit x Yield per acre (eg. kidney bean: $0.42/lb x 1475lb/ac = $619.50/ac) Net Profit = Gross Revenue - Total Cost (eg. kidney bean: $ gross revenue - $ total cost = $ per acre) Operating Expense Ratio = (Operating Cost / Gross Revenue) x 100 (eg. kidney bean: $ operating expense / $619.5 revenue = 55.4%) Return on Investment (ROI) = (Gross Revenue - Total Cost) / Total Cost (eg. kidney bean: ($ $510.81) / $ = 21.3%) Estimated Return on Asset (ROA) = (Margin Over Operating - Labour - Machinery Depreciation) / (Land Investment Cost + Machinery Investment Cost) (eg. kidney bean: ($ margin - $30.00 labour - $49.06 dep.) / ($2800 land cost + $ conv. machinery + $50.00 special crop. mach.) = 5.58%) Breakeven Price = Cost / Target Yield (eg. kidney bean cost $ / 1475 lb = $0.35 per lb) Breakeven Yield = Cost / Target Price per Unit (eg. kidney bean cost $ / $0.42 lb = lb) Breakeven Yield Risk Ratio = (Yield per Acre / Breakeven Yield) x 100 (eg. kidney bean yield 1475 lb/ac / lb BE = 121 %) AgriInsurance Risk Ratio = (AgriInsurance Coverage / Operating Cost) x 100 (eg. kidney bean coverage $490.05/ac / $ operating expense = 143 %) Created and maintained by Manitoba Agriculture Farm Management January, 2018 For more information, contact your local Roy Arnott Manitoba Agriculture Office or: Darren Bond Sharon Ardron Farm Management Specialist Farm Management Specialist Farm Management Specialist

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12 For more information Contact your local Manitoba Agriculture Office. Visit us at manitoba.ca/agriculture. ESR December 2017