A Farm Planning/Decision Tool for Louisiana Sugarcane Growers

Transcription

1 Staff Report No January Sugarcane Crop Cycle Length Evaluation Model Users Guide A Farm Planning/Decision Tool for Louisiana Sugarcane Growers Michael E. Salassi and Michael A. Deliberto Department of Agricultural Economics and Agribusiness Baton Rouge, Louisiana The 2011 Sugarcane Crop Cycle Length Evaluation Model was developed to assist sugarcane producers in evaluating the optimal crop cycle length for various tracts of sugarcane produced on farms in Louisiana. Costs and returns are compared for sugarcane crop cycles through harvest of second and third stubble sugarcane crops. The Excel spreadsheet model contains worksheets which allow entry of data (total acres, planting method, planting ratio, raw sugar price, mill and landlord share, sugar yields, and variable production and harvest costs) used to determine projected costs and returns through alternative sugarcane crop cycle lengths as well as the required breakeven sugar yield level for a third stubble crop. Breakeven sugar yield for a third stubble sugarcane crop is the yield at which total grower net returns above variable costs for a crop cycle through harvest of a third stubble crop would be equal to net returns from a crop cycle through harvest of a second stubble crop, with adjustments to acreage, costs and returns for differences in required seed cane acreage. If projected third stubble sugar yields exceed the estimated breakeven yield, farm/tract net returns could be increased by keeping the tract in production for harvest of a third stubble crop. If projected third stubble sugar yields do not exceed the estimated breakeven yield, farm/tract net returns would be greater by plowing the crop out and replanting after harvest of the second stubble crop. The spreadsheet model contains six separate worksheet pages. The first worksheet page (Crop Cycle Comparison Intro) is a title page which briefly describes the three sections included on each of the following worksheet pages. Following the title page are five identical worksheets (labeled Farm Land Tract 1 through Farm Land Tract 5 ). Each of these worksheets are identical with regard to data entry and costs and returns calculations made. Section 1 allocates farm land tract acreage to various seed cane and production cane categories based on planting method and planting ratio values entered. Section 2 presents estimates of grower returns, variable production costs, and net returns above variable production costs for each crop cycle length. Section 3 allows data entry of variable cost items for various sugarcane production phases. Total variable cost values for the various sugarcane production phases, calculated in Section 3, are automatically transferred to the variable production expenses section of the costs and returns table in Section 2. Evaluation of the economically optimal sugarcane crop cycle length, harvest through third stubble versus harvest through second stubble, must include consideration of not only the projected net returns of producing a third stubble crop, but also the associated changes in required seed cane acreage. This model incorporates those acreage relationships, by determining required fallow, seed cane and production cane acreage for each crop cycle length in Section 1 of each worksheet and then using those acreages to determine costs and returns in Section 2. Breakeven third stubble sugar yields per harvested acre are estimated as a function of several factors including: (a.) total farm net returns through harvest of a second stubble crop, (b.) plant cane crop revenue, (c.) first stubble crop revenue, (d.) second stubble crop revenue, (e.) total farm variable cost through harvest of a third stubble crop, (f.) raw sugar market price, (g.) grower s share of sugarcane crop (after mill and landlord share deductions), and (h.) the percent of total farm acreage devoted to third stubble crop production. Dr. Michael E. Salassi, Professor, and Michael A. Deliberto, Research Associate, Department of Agricultural Economics and Agribusiness LSU Agricultural Center, Baton Rouge, Louisiana. Louisiana Cooperative Extension Service / Louisiana Agricultural Experiment Station

2 Title Page (Crop Cycle Comparison Intro Worksheet): The first worksheet page in the model is a title page which briefly describes the various sections included on each of the following crop cycle length evaluation worksheets. Five identical worksheets are included in the model, allowing for evaluation of up to five different land tract types on the farm. Each of the five worksheets has three sections. Section 1 allocates farm acreage based upon planting method and planting ratio. Section 2 calculates net grower returns above variable cost through harvest of second and third stubble crops. Section 3 allows data entry of variable cost items, with the total variable cost of each production phase automatically transferred to the table in Section 2. Cells requiring data entry on the worksheets are identified with blue text and light blue background. These are the only cell in which data can be entered. All other cells are protected. EVALUATION OF OPTIMAL SUGARCANE CROP CYCLE LENGTH COMPARISON OF HARVEST THROUGH 2ND STUBBLE VS. 3RD STUBBLE A Farm Planning/Decision Tool for Louisiana Sugarcane Growers 2011 This spreadsheet-based farm planning/producer decision tool allows sugarcane producers to compare total farm costs and returns over total farm acres or total acres over a tract of land for two sugarcane crop cycle lengths: (1) harvest through 2nd stubble and (2) harvest through 3rd stubble. Five separate worksheets are included on the following pages to evaluate sugarcane crop cycle length on up to four land tracts on the farm. Each Worksheet is Divided Into the Following Three Sections: Section 1 - Distribution of Seedcane Expansion Acreage & Total Farm Acreage Data Entered Includes: Total Farm (or Land Tract) Acres Type of Planting Method (1=Hand Plant, 2=Mechanical Plant) Hand and/or Mechanical Planting Ratio Section 2 - Projected Farm Income and Expenses Data Entered Includes: Projected Raw Sugar Price Mill Crop Share (%) Landlord Crop Share (%) Plantcane, 1st, 2nd and 3rd Stubble Sugar Yields Optional Crop Revenue on Fallow Land Variable Costs for Sugarcane Production Phases Fallow Acres Planted in Optional Crop Optional Crop Variable Costs on Fallow Land Section 3 - Variable Cost Projections for Sugarcane Production Phases Data Entered Includes: Input Quantity, Input Price and Input Cost Per Acre Data Data Entry Cells are Identified with Blue Text Data Entry Developed by Michael E. Salassi and Michael A. Deliberto Department of Agricultural Economics & Agribusiness - Staff Report No January 2011 Louisiana Agricultural Experiment Station / Louisiana Cooperative Extension Service Tabs located at the bottom of the worksheet page provide access to each of the worksheets in the model. Starting at the title page (Crop Cycle Comparison Intro), clicking on the tab labeled Farm Land Tract 1 will take the user to the first worksheet. The remaining four worksheets can be accessed by clicking on the appropriate tab. Each of the five farm land tract worksheets are identical and independent of each other. Five land tract worksheets are provided to allow for computations on different types or tracts of land (e.g., light soils vs. heavy soils, high-yielding land vs. low-yielding land, variety A vs. variety B, etc.). 2

3 Section 1 (Distribution of Seedcane Expansion Acreage and Total Farm Acreage): Section 1 of each worksheet allows for data entry of total farm acres in the tract to be evaluated, as well as entry of codes for planting methods and the associated planting ratios. Based on the planting method/ratios entered, total acreage on the tract is automatically categorized into the required seed cane acreages and acreages harvested for sugar (plant cane and stubble cane). In terms of seed cane expansion, the assumption made here is that purchased cultured seed cane is planted with both the plant cane and first stubble crops harvested as seed cane, each being expanded twice before being planted as production cane which would be harvested for processing by the mill. A land tract name or id can be entered in cell I5 and the total farm or land tract acreage to be evaluated can be entered in cell K6. Three planting method codes must be entered to represent the seed cane expansion process. Those planting method codes are 1 = hand planting and 2 = mechanical planting. The planting method codes to be entered are for: (a.) planting of the initial purchased seed cane in cell K10, (b.) planting of the first seed cane expansion in cell K13, and (c.) planting of the second seed cane expansion in cell K15. Planting ratios for the first seed cane expansion are entered in cells J13 and N13. Planting ratios for the second seed cane expansion are entered in cells K15 and N15. Section 1 results show comparison of the distribution of farm tract acreage to fallow, planted and harvested acreage for crop cycles through harvest of second and third stubble. Section 1 Data Entry: Data Entry Cell Reference I5 K6.. K10 K13 J13 & N13 K15 J15 & N15 Data Entry Cell Value Description Farm land tract name or id Total farm acres in tract to be evaluated Planting method code for initial purchased seed cane planting [1=hand planted, 2=mechanical planted] Planting method code for first seed cane expansion [1=hand planted, 2=mechanical planted] Planting ratio for first seed cane expansion Planting method code for second seed cane expansion [1=hand planted, 2=mechanical planted] Planting ratio for second seed cane expansion 3

4 Section 2 (Projected Farm Income and Expenses): Section 2 provides a costs and returns comparison for sugarcane crop cycles through harvest of a second stubble versus a third stubble crop, based on the information entered for that farm land tract. Returns are based on grower s share of raw sugar sales; payments for molasses are excluded. User would enter values for raw sugar price, mill share, landlord share, as well as projected values of sugar per harvested acre yields for plant cane through third stubble. A breakeven third stubble yield is calculated, based on the costs and returns data entered. An option is included for production of an optional crop, such as soybeans or wheat, on sugarcane fallow land. Total grower s share of optional crop revenue would be entered in this section. Production costs for optional crop production would be entered in Section 3 and automatically transferred to the costs and returns table in this section. SECTION 2 - PROJECTED FARM INCOME AND EXPENSES Harvest through Harvest through 2nd Stubble Crop 3rd Stubble Crop Raw Sugar Price $0.320 Landlord Share 16.7% [Landlord Share Percentages 1/5 = 20.0%, 1/6 = 16.7%, 1/7 = 14.3%] Mill Share 39.0% Grower Share 50.8% Sugar Acres Total Sugar Acres Total GROSS VALUE OF PRODUCTION: Yield Harvested Farm Yield Harvested Farm (lbs/a) for Sugar Value (lbs/a) for Sugar Value Sugar: Plantcane 8, $560,000 8, $448,000 1st stubble 7, $604,800 7, $483,840 2nd stubble 6, $544,000 6, $435,200 3rd stubble , $361,280 Breakeven 3rd Stubble Yield = 5,606 TOTAL GROSS VALUE $1,708, % $1,728,320 of simple avg. Mill Charge 39.0% $666,432 of PC, 1ST and $674,045 Landlord Charge (% of total crop) 10.2% $174,075 2ST yields $176,064 NET GROSS SUGAR RETURNS TO PRODUCER 50.8% $868,293 $878,211 OPTIONAL CROP REVENUE ON FALLOW LAND (Producer Share) $0 $0 Optional crop name (Cell H107 multiplied by optional crop acres) NET GROSS SUGAR RETURNS TO PRODUCER $868,293 $878,211 VARIABLE PRODUCTION EXPENSES: (cell reference) Cost/Acre Acres Value Cost/Acre Acres Value [1] Sugarcane Fallow Field Operations (H98) $ $35,372 $ $28,298 [2] Optional Crop on Sugarcane Fallow Land (H127) $ $0 $ $0 [3] Cultured Seed Cane Purchase (H140) $ $1,536 $ $1,229 [4] Hand Planting Seedcane (H158) $ $12,315 $ $9,852 [5] Harvesting Seedcane (H170) $ $3,224 $ $2,579 [6] Mechanical Planting Seedcane (H189) $ $50,761 $ $40,609 [7] Plant Cane Field Operations (P104) $ $68,056 $ $54,445 [8] 1st Stubble Field Operations (P125) $ $85,709 $ $68,567 [9] 2nd Stubble Field Operations (P146) $ $84,904 $ $67,924 [10] 3rd Stubble Field Operations (P167) $ $0 $ $67,922 [11] Harvest for Sugar (P180) $ $107,908 $ $117,028 [12] Other Variable Costs Other $ $0 $ $0 [13] Other Variable Costs Other $ $0 $ $0 TOTAL FARM VARIABLE COSTS $449,787 $458,453 NET FARM RETURNS ABOVE VARIABLE COST TO PRODUCER $418,506 $419,759 Section 2 Data Entry: Data Entry Cell Reference Data Entry Cell Value Description E42. Raw sugar market price ($ / pound) E43. Mill share of sugarcane crop (%) H42. Landlord share of crop (%) [1/5 = 20.0%, 1/6 = 16.7%, 1/7 = 14.3%] H47. Plantcane sugar yield per harvested acre (lbs / acre) H48. First stubble sugar yield per harvested acre (lbs / acre) H49. Second stubble sugar yield per harvested acre (lbs / acre) L50. Projected third stubble sugar yield per harvested acre (lbs / acre) J59 & N59. Optional crop revenue on fallow land, producer share ($) [Cell H107 multiplied by optional crop acres] C60. Name of optional crop on fallow land I66 & M66. Acres of sugarcane fallow land planted to optional crop (acres) E76 & E77. Other variable cost item name H76 & H77 Other variable cost value per acre ($ / acre) I76 & I77 Acres applicable for other variable costs listed (acres) 4

5 Section 3 (Variable Costs per Acre for Sugarcane Production Phases): Section 3 allows users to enter data values to calculate variable production costs per acre for alternative sugarcane production phases. Some variable production cost items can be entered as quantities and prices per unit (such as fuel or fertilizer). Other variable production cost items can be entered as dollar per acre cost values (such as herbicides, labor or repairs). Total variable costs per acre, calculated in each table of Section 3, are automatically transferred to the costs and returns tables in Section 2. Eleven separate variable cost tables are included on each worksheet, ranging from fallow field operations to harvest. Cost values from the 2011 Projected Sugarcane Cost Report are included (references to table and page numbers from the 2011 report are listed below each table in this section). Changes in these values can be made to more closely match production expenses on a given tract of land. All required data entry cells in this section are highlighted in blue. SECTION 3 - TABLES BELOW CAN BE USED TO ENTER VARIABLE COST VALUES WHICH ARE TRANSFERRED TO THE SECTION 2 TABLE ABOVE. [1] Sugarcane Fallow Field Expenses (including seedbed prep) [7] Plant Cane Cultivation and Field Operations Expense Item Unit Price Quantity Cost Expense Item Unit Price Quantity Cost Herbicides acre Custom Aerial Appl. appl. $ Labor acre Fertilizer - Nitrogen lbs of N/A $ Fuel gal/a $ Fertilizer - Phosphorus lbs of P/A $ Repair & Maintenance acre Fertilizer - Potassium lbs of K/A $ Service Fees acre 6.00 Fertilizer - Other lbs /A $ Herbicides acre Insecticides acre Service Fees acre 6.00 Interest on Oper. Capit acre 2.93 Labor acre Projected Fallow Expenses $ Fuel gal/a $ Table 4, page 13 in 2011 Projected Sugarcane Costs and Returns Repair & Maintenance acre Surfactant acre 7.81 [2] Optional Crop Production on Sugarcane Fallow Land Interest on Oper. Capita acre 5.60 Revenue Item Unit Price Yield Value Projected Plant Cane Cultivation Expenses $ Optional Crop Name acre $ Table 11, pages in 2011 Projected Sugarcane Costs and Returns Less Landlord Share percent 0.0% 0.00 Net Revenue to Producer $0.00 [8] First Stubble Cultivation and Field Operations Expense Item Unit Price Quantity Cost Expense Item Unit Price Quantity Cost Custom Aerial Appl. appl. $ Herbicides acre 0.00 Fertilizer - Nitrogen lbs of N/A $ Fungicides acre 0.00 Fertilizer - Phosphorus lbs of P/A $ Insecticides acre 0.00 Fertilizer - Potassium lbs of K/A $ Custom Spray Applicat acre 0.00 Fertilizer - Sulfur lbs /A $ Seed acre $ Herbicides acre Labor acre 0.00 Insecticides acre Nitrogen Fertilizer lbs of N/A $ Ripener acre 3.04 Phosphate Fertilizer lbs of P/A $ Service Fees acre 6.00 Potash Fertilizer lbs of K/A $ Labor acre Custom Fert Applicatio acre 0.00 Fuel gal/a $ Fuel acre $ Repair & Maintenance acre Repair & Maintenance acre 0.00 Surfactant acre Service Fees acre 0.00 Interest on Oper. Capita acre 7.37 Projected First Stubble Cultivation Expenses $ Interest on Oper. Capit acre 0.00 Table 12, pages in 2011 Projected Sugarcane Costs and Returns Projected Crop Variable Expenses $0.00 [9] Second Stubble Cultivation and Field Operations Expense Item Unit Price Quantity Cost [3] Purchased Cultured Seed Cane Custom Aerial Appl. appl. $ Expense Item Unit Price Quantity Cost Fertilizer - Nitrogen lbs of N/A $ Purchased seed cane acre Fertilizer - Phosphorus lbs of P/A $ Labor acre 3.17 Fertilizer - Potassium lbs of K/A $ Fuel gal/a $ Fertilizer - Sulfur lbs /A $ Repair & Maintenance acre 7.74 Herbicides acre Insecticides acre Ripener acre 3.04 Service Fees acre 6.00 Interest on Oper. Capit acre Labor acre Projected Purchased Seed Cane Expenses $ Fuel gal/a $ Table 5, page 14 in 2011 Projected Sugarcane Costs and Returns Repair & Maintenance acre Surfactant acre 7.81 [4] Hand Planting, 1-Row Wholestalk Expense Item Unit Price Quantity Cost Fertilizer - Nitrogen lbs of N $ Interest on Oper. Capita acre 7.32 Fertilizer - Phosphorus lbs of P $ Projected Second Stubble Cultivation Expenses $ Fertilizer - Potassium lbs of K $ Table 13, pages in 2011 Projected Sugarcane Costs and Returns 5

6 SECTION 3 - TABLES BELOW CAN BE USED TO ENTER VARIABLE COST VALUES WHICH ARE TRANSFERRED TO THE SECTION 2 TABLE ABOVE. (continued) [4] Hand Planting, 1-Row Wholestalk Other acre Expense Item Unit Price Quantity Cost Other acre Fertilizer - Nitrogen lbs of N $ Interest on Oper. Capita acre Fertilizer - Phosphorus lbs of P $ Projected Second Stubble Cultivation Expenses Fertilizer - Potassium lbs of K $ Table 13, pages in 2011 Projected Sugarcane Costs and Returns Fertilizer - Other lbs /A $ Herbicides acre [10] Third Stubble and Older Cultivation and Field Operations Special Planting Labor acre $ Expense Item Unit Price Quantity Labor acre Custom Aerial Appl. appl. $ Fuel gal/a $ Fertilizer - Nitrogen lbs of N/A $ Repair & Maintenance acre Fertilizer - Phosphorus lbs of P/A $ Fertilizer - Potassium lbs of K/A $ Fertilizer - Sulfur lbs /A $ Herbicides acre Interest on Oper. Capit acre 1.28 Insecticides acre Projected Wholestalk Hand Planting Expenses $ Ripener acre Table 8, page 17 in 2011 Projected Sugarcane Costs and Returns Service Fees acre Labor acre [5] Wholestalk Seed Cane Harvest Fuel gal/a $ Expense Item Unit Price Quantity Cost Repair & Maintenance acre Labor acre Surfactant acre Fuel gal/a $ Other acre Repair & Maintenance acre Other acre Interest on Oper. Capita acre Projected Third Stubble Cultivation Expenses Table 13, pages in 2011 Projected Sugarcane Costs and Returns Interest on Oper. Capit acre 3.03 Projected Seed Cane Harvest Expenses $73.08 [11] Harvest - 1-Row Combine Harvester Table 6, page 15 in 2011 Projected Sugarcane Costs and Returns Expense Item Unit Price Quantity Labor acre Fuel - Tractors gal/a $ [6] Mechanical Planting, 1-Row Wholestalk Fuel - Combine Harves gal/a $ Expense Item Unit Price Quantity Cost Repair & Maintenance acre Fertilizer - Nitrogen lbs of N $ Other acre Fertilizer - Phosphorus lbs of P $ Other acre Fertilizer - Potassium lbs of K $ Other acre Fertilizer - Other lbs /A $ Interest on Oper. Capita acre Herbicides acre Projected Combine Harvest Expenses Special Planting Labor acre $ Table 14, page 26 in 2011 Projected Sugarcane Costs and Returns Labor acre Fuel gal/a $ Repair & Maintenance acre Interest on Oper. Capit acre 9.99 Projected Wholestalk Mech Planting Expenses $ Table 9, page 18 in 2011 Projected Sugarcane Costs and Returns Each of the five worksheets in this sugarcane crop cycle length evaluation model are identical and independent of each other. Multiple worksheets are included to provide flexibility in evaluating optimal crop cycle length over an entire farm. A single worksheet could be used for the entire farm, or multiple worksheets can be used to evaluate optimal crop cycle lengths on segments of the whole farm. Separate worksheets could be used to evaluate production by soil type, by land productivity, by location, or by variety. All required data entry, as well as calculations, for comparison of crop cycles through harvest of a second stubble crop versus harvest through a third stubble crop are made within the same single worksheet. Louisiana Cooperative Extension Service / Louisiana Agricultural Experiment Station