Farm Business Management Reports EB1667

Transcription

1 Farm Business Management Reports EB ENTERPRISE BUDGETS POTATOES, WINTER WHEAT, ALFALFA HAY, GRAIN CORN, SILAGE CORN AND SWEET CORN UNDER CENTER PIVOT IRRIGATION, COLUMBIA BASIN, WASHINGTON Herbert Hinman Gary Pelter Elvin Kulp Robert Gillespie Erik Sorensen

2 NOTE Enterprise costs and returns vary from one farm to the next and over time for any particular farm. Variability stems from differences in:! Capital, labor, land, and management resources! Type and size of machinery complement! Cultural practices! Size of farm and enterprise! Crop yields! Input prices! Commodity prices Costs can also be calculated differently depending on the intended use of the cost estimate. The information in this publication serves as a general guide for enterprises grown on a modern, well-managed Columbia Basin farm. To avoid drawing unwarranted conclusions for any particular enterprise, the reader must closely examine the assumptions used. If they are not appropriate for the situation at hand, you should adjust the costs and/or returns.

3 CONTENTS Page INTRODUCTION SOURCES OF INFORMATION BUDGET ASSUMPTIONS DISCUSSION OF BUDGET INFORMATION Tables 1A-1G: Tables 2A-2G: Schedule of Operations and Costs Per Acre Materials and Services Used by Operation Tables 3A-3G: Itemized Cost Per Acre Tables 4A-4G: Tables 5A-5G: Break-Even Selling Price Per Unit Summary of Receipts, Costs, and Profitability Per Acre Table 6: Machinery Complement Table 7: Hourly Machine Costs Table 8: Input Prices SUMMARY OF RESULTS AND CONCLUDING NOTE BUDGET TABLES Tables 1A-5A: Fall Potatoes Tables 1B-5B: Winter Wheat Tables 1C-5D: Alfalfa Hay Tables 1E-5E: Grain Corn Tables 1F-5F: Silage Corn Tables 1G-5G: Sweet Corn Table 6: Machine Complement Table 7: Hourly Machinery Costs Table 8: Input Prices

4 1997 Enterprise Budgets for Alfalfa Hay, Potatoes, Winter Wheat, Grain Corn, Silage Corn, and Sweet Corn Under Center Pivot Irrigation, Columbia Basin, Washington Herbert Hinman, Gary Pelter, Elvin Kulp, Robert Gillespie, Erik Sorensen * INTRODUCTION The enterprise budgets presented in this publication are based on crops produced in the Bureau of Reclamation's Columbia Basin Project. The project area is in the "big bend" of the Columbia River in south central Washington. Rainfall ranges from 6-10 inches annually; thus, crops depend on irrigation water pumped from behind the Grand Coulee Dam. Irrigation water availability, coupled with a growing season of 140 to 200 days, makes it possible to grow a multitude of crops. The general objective of this study was to develop enterprise budgets for fall potatoes, winter wheat, alfalfa hay, grain corn, silage corn, and sweet corn. The specific objectives were: 1. To identify production practices representative of wellmanaged crop enterprises grown under center pivot irrigation in the Columbia Basin. 2. To provide estimates of capital requirements, production costs, and returns. 3. To provide current and prospective producers with a procedure for analyzing the profitability of various crop enterprises. SOURCES OF INFORMATION The primary information for this study was obtained from a group of Columbia Basin producers. These producers were considered representative of well-managed farms. Their production practices and requirements for labor, equipment, and supplies are the basis for the assumptions used in this study and represent what this group of producers consider to be the latest developments. Local farm suppliers provided price information on materials and other services commonly used by farmers. Machinery costs were based on current purchase prices and rates of annual use considered typical by the producer committee. *Herbert Hinman is an Extension Economist; Gary Pelter, Elvin Kulp and Robert Gillespie are Grant-Adams Area Extension Agents; Erik Sorensen is a Benton-Franklin Area Extension Agent, Cooperative Extension, Washington State University.

5 BUDGET ASSUMPTIONS The following assumptions were made in developing the enterprise data: 1. The enterprise budgets reported are for crops grown under one or more 125-acre center pivot irrigation systems. 2. All land is assumed to be rented with the following rental rates: Potatoes $450 per acre Wheat $150 per acre Alfalfa $250 per acre Grain Corn $150 per acre Silage Corn $150 per acre Sweet Corn $180 per acre 3. The landowner furnishes the center pivot system and the operator pays the irrigation charge amounting to $30.50 per acre, along with annual repairs of about $12 per acre per year. The operator also pays the irrigation power charges which were estimated to be the following: Potatoes (28 acre inches) $50.00 Wheat (24 acre inches) $42.85 Alfalfa (42 acre inches) $75.00 Grain Corn (36 acre inches) $64.30 Silage Corn (36 acre inches) $64.30 Sweet Corn (22 acre inches) $39.16 These power costs are representative of those for farmers in Grant County, Washington. 4. Estimated annual yield per acre for the crop enterprises were: Potatoes Winter Wheat Alfalfa Hay Grain Corn Silage Corn Sweet Corn 28.5 tons 120 bushels 8 tons 5 tons 30 tons 9 tons 5. Estimated average price to the farmer for the crops were: Potatoes $ 89.00/ton Winter Wheat $ 4.00/bushel Alfalfa Hay $110.00/ton Grain Corn $125.00/ton Silage Corn $ 26.00/ton Sweet Corn $ 68.00/ton 6. The interest rate is 10%. EB1667$Page 2

6 DISCUSSION OF BUDGET INFORMATION The budget information for each crop is reported in a set of eight tables. A summary of the information in each table follows. Tables 1A-1G: Schedule of Operations and Costs Per Acre Table 1 outlines the schedule of field operations by month, the type of machinery and labor use, the hours of machine use per acre, and total production costs. Production costs are divided into two categories: (1) fixed costs, which include machinery ownership, land costs, and management; and (2) variable costs, which are associated with operating machinery, hiring labor, and purchasing services and materials. Total cost is the sum of fixed and variable costs. Machinery fixed costs include depreciation, interest on the investment, property taxes, insurance, and housing costs. These costs are incurred whether or not a crop is grown and do not vary with the size of the enterprise, given the ownership of a specific machinery complement. Machinery fixed costs for a specific field operation are determined by multiplying the machine hours per acre times the per-hour fixed cost. The perhour fixed costs, shown in Table 7, are determined by dividing the total annual fixed cost by the annual hours of machinery use over all enterprises for the representative farm. Land fixed cost is equal to the cash rent typical of the area. Much of the land used for production is rented. Even if you produce a crop on the land you own, the prevailing rental rate is an opportunity cost or foregone return for not renting out the land. Although individual rental arrangements vary, in many situations the tenant pays a cash rent and the landowner pays the property taxes. An opportunity cost for management is also included in Table 1. For management, a cost of 7% of expected gross receipts is used. This is representative of management fees charged by farm management firms in the Columbia Basin and is an estimate of the value of an operator's management skills. For alfalfa, an amortized establishment cost is also included. This cost represents establishment year costs that must be recaptured during the following three production years. Variable costs depend directly on the number of crop acres and type of enterprise. These costs include labor, fuel, oil, repairs, fertilizer, chemicals, custom work, interest on operating capital, and overhead (telephone, utilities, legal, accounting, organization dues, etc.). EB1667$Page 3

7 Tables 2A-2G: Materials and Services Used by Operation Table 2 lists, by operation and per acre, the specific services and/or materials used, the quantities used, and the prices paid for each enterprise analyzed in this study. Tables 3A-3G: Itemized Cost Per Acre Table 3 is an itemized summary of the costs presented by field operation in Table 1. Most items are self-explanatory. However, "Tractor Interest" and "Machinery Interest" warrant an explanation. These costs represent the opportunity cost (returns foregone by investing in machinery rather than in alternative investments) or interest paid to finance this equipment. The cost is calculated on the average annual value of the machinery multiplied times a 10% interest rate: Purchase Price - Salvage Value X 10% 2 Tables 4A-4G: Break-Even Selling Price Per Unit Table 4 shows break-even selling prices for different levels of enterprise costs. The first break-even price is the price needed to cover total variable costs--those costs that occur only if the crop is produced. If the price received does not equal or exceed the variable cost break-even price, the crop becomes uneconomical to produce even in the short-run because the added costs of production are greater than the added returns. The second break-even price is the price required to cover total cash costs, assuming no interest on machinery loans. If other cash costs exist on your farm, you must identify these costs and include them in the cash cost break-even calculation. Furthermore, since a cash cost has been attributed to all labor and to land rent, you should subtract any noncash costs for operator/family labor and owned land before calculating the price needed to cover cash costs. The third break-even price is the price needed to cover total cash costs, plus depreciation on machinery. You must realize this price to stay in business over the long run. The fourth break-even price is the price you must receive to recover total costs including cash costs, depreciation, operator labor and management, and opportunity costs for investments in equipment. Failure to receive this price means you will not realize a return on your management, labor, and capital contributions equivalent to what you could earn from an alternative use. Realizing a price above the break-even level means that, in addition to covering all costs, you will earn a premium for the risk assumed in producing the crop. EB1667$Page 4

8 Tables 5A-5G: Summary of Receipts, Costs, and Profitability Per Acre Table 5 summarizes receipts, costs, and various measures of profitability for the crop enterprise. The assumed commodity price is an estimate of what the 1997 price may be and is by no means a "predicted" price. Since profitability depends significantly on price received, you should recalculate profitability using your own predicted price. The first measure is estimated total receipts, calculated by multiplying the predicted price times the predicted yield. The second measure is returns over variable costs and land rent, which was calculated by subtracting total variable costs and land rent from total receipts. The third measure, returns to management and risk, was calculated by subtracting the machinery fixed expenses and establishment cost (alfalfa) from returns over variable cost and land rent. This is the return you realize for your management and risk after accounting for all costs including $12.00 per hour for any labor contributed to producing the crop. Table 6: Machinery Complement Table 6 identifies the machinery complement used to derive machinery costs. It includes the type of machines used on the representative farm, their current replacement value (new or used), years of use before trade-in, salvage value at trade-in, annual repair cost and annual hours of use. Table 7: Hourly Machinery Costs The data in Table 6 are used to estimate per-hour fixed and variable costs appearing in Table 7. Machinery fixed costs include depreciation and interest on investment, property taxes, and insurance--costs that do not vary with the crop grown or the number of acres produced. Current replacement costs are used for all machinery and equipment. While this assumption may result in an overstatement of production costs, it is an indication of the enterprise's ability to generate the earnings needed to replace depreciable assets. Continuing increases in prices paid for machinery and equipment mean that depreciation claimed on assets purchased before price advances understates the amount of capital currently required to replace assets. When an enterprise is evaluated to determine its long-run viability, it is important to consider its ability to replace depreciable assets. Note that interest on investment represents an 10% opportunity cost to the enterprise. These are earnings foregone by investing money in the machinery complement rather than the next best alternative. This may also represent the interest paid on funds borrowed to finance machinery purchases. Machinery variable costs include machine repair, fuel, and lubrication--costs that vary with the crop grown or the number of acres of crop produced. EB1667$Page 5

9 Table 8: Input Prices Prices used for fuel, fertilizer, chemicals, seed, custom services, and other inputs are listed in Table 8. SUMMARY OF RESULTS AND CONCLUDING NOTE This publication estimates the production costs of six crops commonly grown in the Columbia Basin under center pivot irrigation. The yields and prices received for these crops are only an estimate of what the 1997 yields and prices may be. However, when using these yields and prices in comparing possible returns with probable cost, several of these budgets show a negative return to management and risk (see Tables 5A - 5G). The variable, fixed, and total cost and the break-even prices for these crops under the given assumptions are the following: Grain Silage Sweet Potatoes Wheat Alfalfa Corn Corn Corn Variable Cost/Acre $1,659 $294 $334 $511 $612 $441 Fixed Cost/ Acre $ 744 $212 $469 $228 $239 $284 Total Cost/ Acre $2,403 $506 $803 $739 $851 $725 Estimated Yield/Acre 28.5 Tons 120 Bu. 8 Tons 5 Tons 30 Tons 9 Tons Break-Even Price/Unit $83.22 $4.21 $ $ $28.37 $80.56 These results were discussed with a number of producers in the Columbia Basin. The general comment was that the budgets are representative of their costs. Further, they commented that during times in which returns do not cover total costs, they remain in business by postponing equipment replacement and by accepting a lower return for their labor, management, and equity. Users of these budgets should understand the procedures and assumptions used in this study and interpret the results accordingly. It was recognized by the producers and authors involved in organizing this information that these budgets do not represent any one particular operation. Therefore, you should use these budgets only as a general guide to help derive budgets for your own particular operation. Moreover, this publication is not intended as a guide to recommended production practices. Rather, it represents current production practices and technology used in the area. EB1667$Page 6

10 TABLE 1A SCHEDULE OF OPERATIONS AND ESTIMATED COSTS PER ACRE FOR FALL RUSSET BURBANK POTATOES FOLLOWING ALFALFA IN THE COLUMBIA BASIN; CENTER PIVOT IRRIGATION. VARIABLE COST TOTAL FUEL, TOTAL MACH LABOR FIXED LUBE, & VARIABLE TOTAL OPERATION TOOLING MTH YEAR HOURS HOURS COST REPAIRS LABOR SERVICE MATER. INTER. COST COST $ $ $ $ $ $ $ $ NEMA TEST CUSTOM TEST OCT TILL FIELD 300HP-WT, 17' CHISEL CHOPPER OCT FUMIGATE* THROUGH SPRINKLER OCT NEMA TEST CUSTOM TEST NOV MONITOR CROP CONSULTANT SEA FERTILIZE CUSTOM DOUBLE SPREAD APPLIC. MAR TILL FIELD 300HP-WT, 17' CHISEL CHOPPER APR HAUL SEED CUSTOM HAULING APR LOAD SEED FRONT-END LOADER APR PLANT** 200HP-WT, 6R-POTATO PLANTER APR INSECTICIDE INSECTICIDE APPLICATOR W/ABOVE APR IRRIGATE CENTER PIVOT, 28 AC. IN. SEA DRAG OFF 200HP-WT, 24' HARROW MAY RESERVOIR TILL 200HP-WT, 6R-DAMMER/DIKER MAY COVER SPRAY CUSTOM AERIAL MAY HERBIGATE THROUGH SPRINKLERS JUN FERTIGATE THROUGH SPRINKLERS JUN FUNGIGATE THROUGH SPRINKLERS JUN COVER SPRAY CUSTOM AERIAL JUN FERTIGATE THROUGH SPRINKLERS JUL FUNGIGATE THROUGH SPRINKLERS JUL FUNGIGATE THROUGH SPRINKLERS JUL COVER SPRAY CUSTOM AERIAL JUL FUNGIGATE THROUGH SPRINKLERS AUG COVER SPRAY CUSTOM AERIAL AUG DEFOLIATE CUSTOM AERIAL SEP PULL/PACK 200HP-WT SEP DIG POTATOES 200HP-WT, 3R-POTATO HARVESTER SEP HAUL POTATOES CUSTOM HAUL SEP CUSTOM PILING STORAGE SEP PICKUP, MANAGEMT 3/4 TON ANN PICKUP, IRRIGATN 3/4 TON ANN OVERHEAD UTILITIES,LEGAL,ACCT.,ETC. ANN LAND COST NET RENT ANN MANAGEMENT 7% OF EXPECTED GROSS RETURNS ANN TOTAL PER ACRE *GROUND APPLICATION WOULD RESULT IN AN INCREASE OF APPROXIMATELY $40 PER ACRE. **SEED INCLUDES FUNGICIDE TREATMENT AND CUTTING. EB1667-Page 7

11 Table 2A. Operation Materials and Services Used by Operation for Producing Fall Potatoes Material and/or Service Nema Test September Custom $1.00/acre Fumigate October 37.5 gals. of metham $4.20/gal. Nema Test November Custom $1.00/acre Monitor Crop Season Private $14.00/acre Fertilize March Custom double spread $8.00/acre 125 lbs. of nitrogen 34 /lb. 230 lbs. of phosphate 25 /lb. 350 lbs. of 14 /lb. 80 lbs. of 10 /lb. 5 lbs. of $1.05/lb. 1.5 lbs. of $2.90/lb. Haul Seed April 1.15 tons of seed per $7.00/ton Plant April 23 cwt. of seed per $11.00/cwt.* Insecticide April 17 lbs. of $3.95/lb. Irrigate Season Irrigation $30.50/acre Irrigation $50.00/acre Irrigation $12.00/acre Cover Spray May Aerial $6.50/acre 2 lbs. of $4.00/lb. 4 lbs. of sulfur 80 /lb. 5 lbs. of foliar $1.00/lb. 7% of total spray cost Herbigation June 0.5 lbs. of $27.95/lb. Fertigate June 100 lbs. of nitrogen 35 /lb. 30 lbs. of phosphate 36 /lb. 17 lbs. of sulfur 19.3 /lb. Fungigate June 1.5 pints of $7.56/pint EB1667$Page 8

12 Table 2A. Operation Materials and Services Used by Operation for Producing Fall Potatoes (Continued) Material and/or Service Cover Spray June Aerial $6.50/acre 1 qt. of $21.25/qt. 5 lbs. of foliar $1.00/lb. 4 lbs. of sulfur 80 /lb. 7% of total spray cost Fertigate July 80 lbs. of nitrogen 34 /lb. 30 lbs. of phosphate 36 /lb. 13 lbs. of sulfur 19.3 /lb. Fungigate July 2 lbs. of $24.44/lb. Fungigate July 1.5 pints of $7.56/pint Cover Spray July Aerial $6.50/acre 1.5 pints of $7.56/pint 1 qt. of $21.25/qt. 2.5 pts. of $11.06/pint 4 lbs. of sulfur 80 /lb. 5 lbs. of foliar $1.00/lb. 7% of total spray cost Fungigate August 2 lbs. of $3.90/lb lbs. of $32.25/lb. Cover Spray August Aerial $6.50/acre 2 lbs. of $4.00/lb. 1 qt. of $21.25/qt. 7% of total spray cost Defoliate September Aerial $6.50/acre 1 qt. of $23.50/qt. Haul September Custom $6.00/ton (28.5 ton yield + 5% dirt) Custom Piling September storage $2.50/ton (28.5 ton yield + 5% dirt) Overhead Annual 5% of variable cost *Seed includes fungicide treatment and cutting. EB1667$Page 9

13 TABLE 3A ITEMIZED COST PER ACRE FOR FALL RUSSET BURBANK POTATOES FOLLOWING ALFALFA IN THE COLUMBIA BASIN; CENTER PIVOT IRRIGATION PRICE OR VALUE OR YOUR UNIT COST/UNIT QUANTITY COST FARM VARIABLE COSTS $ $ NEMA TEST ACRE METHAM SODIUM GAL POTATO SEED CWT CONSULTANT ACRE NITROGEN (DRY) LB NITROGEN (LIQ) LB PHOSPHATE (DRY) LB PHOSPHATE (LIQ) LB POTASH LB ZINC LB BORON LB SULFUR LB SULFUR (LIQ) LB SULFUR FUNGICIDE LB FOLIAR NUTRIENT LB TEMIK LB METRIBUZIN LB CHLOROTHALONIL PT MANCOZEB LB MONITOR QT COMITE PT ROVRAL PT POLYRAM LB SUPER-TIN LB DIQUAT QT ADJUVANT ACRE CUSTOM FERTILIZE ACRE CUSTOM AERIAL ACRE CUSTOM HAULING (SEED) TON CUSTOM HAULING TON CUSTOM PILING TON IRRIGATION WATER ACRE IRRIGATION POWER ACRE IRRIGATION REPAIR ACRE TRACTOR REPAIR ACRE TRACTOR FUEL/LUBE ACRE MACHINERY REPAIRS ACRE MACHINE FUEL/LUBE ACRE LABOR(TRAC/MACH/IRR) HOUR OVERHEAD ACRE INTEREST ON OP. CAP. ACRE TOTAL VARIABLE COST FIXED COSTS $ $ TRACTOR DEPRECIATION ACRE TRACTOR INTEREST ACRE TRACTOR INSURANCE ACRE TRACTOR TAXES ACRE TRACTOR HOUSING ACRE MACHINE DEPRECIATION ACRE MACHINE INTEREST ACRE MACHINE INSURANCE ACRE MACHINE TAXES ACRE MACHINE HOUSING ACRE MANAGEMENT FEE* ACRE LAND RENT ACRE TOTAL FIXED COST TOTAL COST *7% OF EXPECTED GROSS RETURNS (28.5 TONS X $89 X.07) EB1667$Page 10

14 TABLE 4A. BREAK-EVEN SELLING PRICE PER TON OF FALL POTATOES PRODUCED IN THE COLUMBIA BASIN UNDER CENTER PIVOT IRRIGATION COST PER YOUR BREAK-EVEN YOUR ACRE FARM PRICE ($/TON) FARM $ $ (28.5 TONS) $ 1. TOTAL VARIABLE COST 1, PLUS: INSURANCE 3.14 TAXES 9.41 LAND RENT TOTAL CASH COSTS 2,121.6O PLUS: DEPRECIATION TOTAL CASH COST & DEPRECIATION 2, PLUS: INTEREST HOUSING 5.23 MANAGEMENT TOTAL COST 2, EB1667$Page 11

15 TABLE 5A. SUMMARY OF RECEIPTS, COSTS, AND PROFITABILITY PER ACRE FOR FALL POTATOES PRODUCED IN THE COLUMBIA BASIN UNDER CENTER PIVOT IRRIGATION VALUE OR YOUR PRICE/UNIT QUANTITY COST FARM GROSS RECEIPTS POTATOES $ TONS $2, TOTAL RECEIPTS $2, LESS: TOTAL VARIABLE COST $1, LAND RENT $ RETURNS OVER VARIABLE COST AND LAND RENT $ LESS: FIXED COST $ NET RETURNS TO MANAGEMENT AND RISK $ EB1667$Page 12

16 TABLE 1B SCHEDULE OF OPERATIONS AND ESTIMATED COSTS PER ACRE FOR WHITE WINTER WHEAT FOLLOWING POTATOES IN THE COLUMBIA BASIN; CENTER PIVOT IRRIGATION. VARIABLE COST TOTAL FUEL, TOTAL MACH LABOR FIXED LUBE, & VARIABLE TOTAL OPERATION TOOLING MTH YEAR HOURS HOURS COST REPAIRS LABOR SERVICE MATER. INTER. COST COST $ $ $ $ $ $ $ $ DISC 200HP-WT, 20' OFFSET DISC OCT SUBSOIL 200HP-WT, 12' SUBSOILER OCT PLANT 150HP-WT, 20' DISC DRILL OCT IRRIGATE CENTER PIVOT, 24 AC. IN. SEA SOIL TEST CUSTOM TEST MAR FERTILIZE CUSTOM APPLICATION MAR WEED CONTROL CUSTOM APPLICATION APR NITROGATION THROUGH SPRINKLERS (50#) APR NITROGATION THROUGH SPRINKLERS (50#) MAY HARVEST CUSTOM HARVEST JUL HAUL CUSTOM HAUL JUL PICK-UP 3/4 TON ANN OVERHEAD UTILITIES,LEGAL,ACCT.,ETC. ANN LAND COST LAND RENT ANN MANAGEMENT 7% OF EXPECTED GROSS RETURNS ANN TOTAL PER ACRE EB1667-Page 13

17 Table 2B. Operation Materials and Services Used by Operation for Producing White Winter Wheat Material and/or Service Plant October 80 lbs. of wheat 10.5 /lb. Irrigate Season Irrigation $24.40/acre Irrigation $42.85/acre Irrigation $8.33/acre Soil test March Custom $1.50/acre Fertilize March Custom $5.00/acre 100 lbs. of nitrogen 34 /lb. Weed Control April Custom $5.50/acre 0.3 ounces of Harmony $15.99/oz. 1.5 pints of $7.88/pint Nitrogation April 50 lbs. of nitrogen 35 /lb. Nitrogation May 50 lbs. of nitrogen 35 /lb. Harvest July Custom $38.00/acre Haul July Custom $4.00/ton Overhead Annual 7.5% of variable cost EB1667$Page 14

18 TABLE 3B ITEMIZED COST PER ACRE FOR WHITE WINTER WHEAT FOLLOWING POTATOES IN THE COLUMBIA BASIN; CENTER PIVOT IRRIGATION PRICE OR VALUE OR YOUR UNIT COST/UNIT QUANTITY COST FARM VARIABLE COSTS $ $ SOIL TEST ACRE WHEAT SEED LB CUSTOM FERTILIZE ACRE NITROGEN (DRY) LB NITROGEN (LIQ) LB CUSTOM SPRAY ACRE HARMONY-EXTRA OZ BUCTRIL PINT CUSTOM HAULING TON CUSTOM COMBINE ACRE IRRIGATION WATER ACRE IRRIGATION POWER ACRE IRRIGATION REPAIR ACRE TRACTOR REPAIR ACRE TRACTOR FUEL/LUBE ACRE MACHINERY REPAIRS ACRE MACHINE FUEL/LUBE ACRE LABOR(TRAC/MACH/IRR) HOUR OVERHEAD ACRE INTEREST ON OP. CAP. ACRE TOTAL VARIABLE COST FIXED COSTS $ $ TRACTOR DEPRECIATION ACRE TRACTOR INTEREST ACRE TRACTOR INSURANCE ACRE TRACTOR TAXES ACRE TRACTOR HOUSING ACRE MACHINE DEPRECIATION ACRE MACHINE INTEREST ACRE MACHINE INSURANCE ACRE MACHINE TAXES ACRE MACHINE HOUSING ACRE MANAGEMENT FEE* ACRE LAND RENT ACRE TOTAL FIXED COST TOTAL COST *7% OF EXPECTED GROSS RETURNS (120 BU. X $4.00 X.O7) EB1667$Page 15

19 TABLE 4B. BREAK-EVEN SELLING PRICE PER BUSHEL OF WHITE WINTER WHEAT FOLLOWING POTATOES PRODUCED IN THE COLUMBIA BASIN UNDER CENTER PIVOT IRRIGATION COST PER YOUR BREAK-EVEN YOUR ACRE FARM PRICE ($/BU.) FARM $ $ (120 BU.) $ 1. TOTAL VARIABLE COST PLUS: INSURANCE.78 TAXES 2.32 LAND RENT TOTAL CASH COSTS PLUS: DEPRECIATION TOTAL CASH COST & DEPRECIATION PLUS: INTEREST HOUSING 1.29 MANAGEMENT TOTAL COST EB1667$Page 16

20 TABLE 5B. SUMMARY OF RECEIPTS, COSTS, AND PROFITABILITY PER ACRE FOR PRODUCING WINTER WHEAT FOLLOWING POTATOES IN THE COLUMBIA BASIN UNDER CENTER PIVOT IRRIGATION VALUE OR YOUR PRICE/UNIT QUANTITY COST FARM GROSS RECEIPTS WINTER WHEAT $ BU. $ TOTAL RECEIPTS $ LESS: TOTAL VARIABLE COST $ LAND RENT $ RETURNS OVER VARIABLE COST AND LAND RENT $ LESS: FIXED COST $ NET RETURNS TO MANAGEMENT AND RISK $ EB1667$Page 17

21 TABLE 1C SCHEDULE OF OPERATIONS AND ESTIMATED COSTS PER ACRE FOR ESTABLISHING ALFALFA HAY FOLLOWING WHEAT OR BARLEY IN THE COLUMBIA BASIN; CENTER PIVOT IRRIGATION.* VARIABLE COST TOTAL FUEL, TOTAL MACH LABOR FIXED LUBE, & VARIABLE TOTAL OPERATION TOOLING MTH YEAR HOURS HOURS COST REPAIRS LABOR SERVICE MATER. INTER. COST COST $ $ $ $ $ $ $ $ FERTILIZE** CUSTOM APPLICATION AUG DISC & PACK 150HP-WT, 13' TANDUM DISC&PACK AUG CHISEL 200HP-WT, 13' CHISEL AUG DISC & PACK 150HP-WT, 13' TANDUM DISK&PACK AUG HARROW 150HP-WT, 36' HARROW AUG PLANT 150HP-WT, RENTED AIR SEEDER AUG IRRIGATE CENTER PIVOT; 6 AC. IN. SEP PICK-UP 3/4 TON ANN OVERHEAD UTILITIES,LEGAL,ACCT.,ETC. ANN TOTAL PER ACRE *ALL FIXED COSTS ASSOCIATED WITH LAND & MANAGEMENT ARE ALLOCATED TO THE PRECEDING CROP. **ASSUMES THAT THE STRAW HAS BEEN REMOVED FIRST. EB1667-Page 18

22 Table 2C. Materials and Services Used by Operation for Establishing Alfalfa Hay Operation Material and/or Service Fertilize August Custom fertilizer $5.00/acre 25 lbs. of 34 /lb. 100 lbs. of 25 /lb. 1 lb. of $2.90/lb. 100 lbs. of 14 /lb. Plant August Rented air $6.00/acre 22 lbs. of alfalfa $2.80/lb. Irrigate Sept.-Oct. Irrigation $10.70/acre Irrigation $6.10/acre Irrigation $1.67/acre Overhead Annual 7.5% of variable cost EB1667$Page 19

23 TABLE 3C ITEMIZED COST PER ACRE FOR ESTABLISHING ALFALFA HAY FOLLOWING WHEAT OR BARLEY IN THE COLUMBIA BASIN; CENTER PIVOT IRRIGATION.* PRICE OR VALUE OR YOUR UNIT COST/UNIT QUANTITY COST FARM VARIABLE COSTS $ $ RENTED AIR SEED ACRE ALFALFA SEED LB CUSTOM FERTILIZE ACRE NITROGEN (DRY) LB PHOSPHATE (DRY) LB BORON LB POTASH LB IRRIGATION POWER ACRE IRRIGATION REPAIR ACRE IRRIGATION WATER ACRE TRACTOR REPAIR ACRE TRACTOR FUEL/LUBE ACRE MACHINERY REPAIRS ACRE MACHINE FUEL/LUBE ACRE LABOR(TRAC/MACH/IRR) HOUR INTEREST ON OP. CAP. ACRE OVERHEAD ACRE TOTAL VARIABLE COST FIXED COSTS $ $ TRACTOR DEPRECIATION ACRE TRACTOR INTEREST ACRE TRACTOR INSURANCE ACRE TRACTOR TAXES ACRE TRACTOR HOUSING ACRE MACHINE DEPRECIATION ACRE MACHINE INTEREST ACRE MACHINE INSURANCE ACRE MACHINE TAXES ACRE MACHINE HOUSING ACRE TOTAL FIXED COST TOTAL COST *ALL FIXED COSTS ASSOCIATED WITH LAND & MANAGEMENT ARE ALLOCATED TO THE PRECEDING CROP. EB1667$Page 20

24 TABLE 1D SCHEDULE OF OPERATIONS AND ESTIMATED COSTS PER ACRE FOR PRODUCTION OF ALFALFA HAY IN THE COLUMBIA BASIN; CENTER PIVOT IRRIGATION. VARIABLE COST TOTAL FUEL, TOTAL MACH LABOR FIXED LUBE, & VARIABLE TOTAL OPERATION TOOLING MTH YEAR HOURS HOURS COST REPAIRS LABOR SERVICE MATER. INTER. COST COST $ $ $ $ $ $ $ $ FERTILIZE* CUSTOM APPLICATION NOV WEED CONTROL CUSTOM HERBICIDE APPLIC. MAR IRRIGATION CENTER PIVOT, 42 AC. IN. SEA SWATH 70HP/14' WINDROWER MAY RAKE & TURN 85HP-WT, 18' TWO-ROW RAKE MAY BALE 150HP-WT, PTO BALER MAY REMOVE & STACK CUSTOM BALE WAGON MAY SWATH 70HP/14' WINDROWER JUL RAKE & TURN 85HP-WT, 18' TWO-ROW RAKE JUL REMOVE & STACK CUSTOM BALE WAGON JUL BALE 15OHP-WT, PTO BALER JUL SWATH 70HP/14' WINDROWER AUG RAKE & TURN 85HP-WT, 18' TWO-ROW RAKE AUG REMOVE & STACK CUSTOM BALE WAGON AUG BALE 150HP-WT, PTO BALER AUG SWATH 70HP/14' WINDROWER OCT RAKE & TURN 85HP-WT, 18' TWO-ROW RAKE OCT REMOVE & STACK CUSTOM BALE WAGON OCT BALE 150HP-WT, PTO BALER OCT GOPHER CONTROL COST OF ANNUAL GOPHER CONTROL ANN PICK-UP 3/4 TON ANN OVERHEAD UTILITIES, LEGAL, ACCT., ETC. ANN LAND COST NET RENT ANN MANAGEMENT 7% OF EXPECTED GROSS RETURNS ANN ESTABLISHMENT** PRORATED ESTABLISHMENT COST ANN TOTAL PER ACRE *TWO-THIRDS OF APPLIED COST SINCE FERTILIZER NOT APPLIED FIRST YEAR OF PRODUCTION. **$ ESTABLISHMENT COST AMORTIZED OVER 3 YEARS AT 10% INTEREST. EB1667-Page 21

25 Table 2D. Materials and Services Used by Operation for Producing Alfalfa Hay Operation Material and/or Service Fertilize* November Custom fertilize $5.00/acre 100 lbs. of 25 /lb. 100 lbs. of 14 /lb. 4 lbs. of $1.05/lb. 1 lb. of $2.90/lb. Weed Control Feb./Mar. Custom $5.50/acre 0.38 lbs. of $27.95/lb. 1 pint of $5.13/pint Irrigate Season Irrigation $30.50/acre Irrigation $75.00/acre Irrigation $10.00/acre Bale May 1,050 ft. of baling $3.20/1,000 ft. Remove & Stack May 2.5 tons of $5.00/ton Bale June/July 840 ft. of baling $3.20/1,000 ft. Remove & Stack June/July 2 tons of $5.00/ton Bale July/August 840 ft. of baling $3.20/1,000 ft. Remove & Stack July/August 2 tons of $5.00/ton Bale Sept./Oct. 630 ft. of baling $3.20/1,000 ft. Remove & Stack Sept./Oct. 1.5 tons of $5.00/ton Gopher Control Annual Cost of gopher $2.00/acre Overhead Annual 7.5% of variable cost *Fertilizer application not applied the first year of production. Application rate shown is per acre applied. EB1667$Page 22

26 TABLE 3D ITEMIZED COST PER ACRE PRODUCTION OF ALFALFA HAY IN THE COLUMBIA BASIN; CENTER PIVOT IRRIGATION PRICE OR VALUE OR YOUR UNIT COST/UNIT QUANTITY COST FARM VARIABLE COSTS $ $ CUSTOM FERTILIZE* ACRE PHOSPHATE (DRY)* LB POTASH* LB BORON* LB ZINC* LB CUSTOM SPRAY ACRE METRIBUZIN LB GRAMOXONE-EXTRA PINT CUSTOM BALE WAGON TON TWINE 1000FT GOPHER CONTROL ACRE IRRIGATION WATER ACRE IRRIGATION POWER ACRE IRRIGATION REPAIR ACRE TRACTOR REPAIR ACRE TRACTOR FUEL/LUBE ACRE MACHINERY REPAIRS ACRE MACHINE FUEL/LUBE ACRE LABOR(TRAC/MACH/IRR) HOUR OVERHEAD ACRE INTEREST ON OP. CAP. ACRE TOTAL VARIABLE COST FIXED COSTS $ $ TRACTOR DEPRECIATION ACRE TRACTOR INTEREST ACRE TRACTOR INSURANCE ACRE TRACTOR TAXES ACRE TRACTOR HOUSING ACRE MACHINE DEPRECIATION ACRE MACHINE INTEREST ACRE MACHINE INSURANCE ACRE MACHINE TAXES ACRE MACHINE HOUSING ACRE MANAGEMENT FEE** ACRE LAND RENT ACRE ESTABABLISHMENT COST ACRE TOTAL FIXED COST TOTAL COST *TWO-THIRDS OF APPLIED COST SINCE FERTILIZER NOT APPLIED FIRST YEAR OF PRODUCTION. **7% OF EXPECTED GROSS RETURNS (8 TONS X $110 X.07) EB1667$Page 23

27 TABLE 4D. BREAK-EVEN SELLING PRICE PER TON OF ALFALFA HAY PRODUCED IN THE COLUMBIA BASIN UNDER CENTER PIVOT IRRIGATION COST PER YOUR BREAK-EVEN YOUR ACRE FARM PRICE ($/TON) FARM $ $ (8 TONS) $ 1. TOTAL VARIABLE COST PLUS: INSURANCE 1.49 TAXES 4.49 LAND RENT TOTAL CASH COSTS PLUS: DEPRECIATION TOTAL CASH COST & DEPRECIATION PLUS: INTEREST HOUSING 2.50 AMORTIZED ESTABLISHMENT COST MANAGEMENT TOTAL COST EB1667$Page 24

28 TABLE 5D. SUMMARY OF RECEIPTS, COSTS, AND PROFITABILITY PER ACRE FOR ALFALFA HAY PRODUCED IN THE COLUMBIA BASIN UNDER CENTER PIVOT IRRIGATION VALUE OR YOUR PRICE/UNIT QUANTITY COST FARM GROSS RECEIPTS ALFALFA $ TONS $ TOTAL RECEIPTS $ LESS: TOTAL VARIABLE COST $ LAND RENT $ RETURNS OVER VARIABLE COST AND LAND RENT $ LESS: FIXED COST $ AMORTIZED ESTABLISHMENT COST $ NET RETURNS TO MANAGEMENT AND RISK $ EB1667$Page 25

29 TABLE 1E SCHEDULE OF OPERATIONS AND ESTIMATED COSTS PER ACRE FOR GRAIN CORN FOLLOWING WHEAT IN THE COLUMBIA BASIN; CENTER PIVOT IRRIGATION. VARIABLE COST TOTAL FUEL, TOTAL MACH LABOR FIXED LUBE, & VARIABLE TOTAL OPERATION TOOLING MTH YEAR HOURS HOURS COST REPAIRS LABOR SERVICE MATER. INTER. COST COST $ $ $ $ $ $ $ $ DISC & PACK 200HP-WT,20'OFFSET DISC & PACK NOV IRRIGATE CENTER PIVOT, 36 AC. IN. SEA SOIL TEST CUSTOM TEST MAR FERTILIZE CUSTOM APPLICATION APR DISC & PACK 200HP-WT,20'OFFSET DISC & PACK APR PLANT* 85HP-WT, SIX-ROW PLANTER MAY HERBICIDE CUSTOM APPLICATION MAY RESERVOIR TILL 200HP-WT, 6R-DAMMER/DIKER MAY NITROGATION THROUGH SPRINKLERS (75#) JUN NITROGATION THROUGH SPRINKLERS (75#) JUL HARVEST CUSTOM COMBINE OCT HAUL CUSTOM HAUL OCT DRY CORN CUSTOM DRY OCT PICK-UP 3/4 TON ANN OVERHEAD UTILITIES,LEGAL,ACCT.,ETC. ANN LAND COST LAND RENT ANN MANAGEMENT 7% OF EXPECTED GROSS RETURNS ANN TOTAL PER ACRE *SEED INCLUDES INSECTICIDE AND FUNGICIDE TREATMENT. EB1667-Page 26

30 Table 2E. Materials and Services Used by Operation for Producing Grain Corn Operation Material and/or Service Irrigate Season Irrigation $30.50/acre Irrigation $64.30/acre Irrigation $10.00/acre Soil test March Custom $1.50/acre Fertilize April Custom $5.00/acre 150 lbs. of nitrogen 34 /lb. 100 lbs. of phosphate 25 /lb. 100 lbs. of 14 /lb. 15 lbs. of 10 /lb. 3 lbs. of $1.05/lb. Plant May Corn $25.00/acre* Herbicide May Custom $5.50/acre $25.00/acre Nitrogate June 75 lbs. of nitrogen 35 /lb. Nitrogate July 75 lbs. of nitrogen 35 /lb. Harvest October Custom $38.00/acre Haul October Custom $4.00/ton Dry Corn October Custom $10.00/ton Overhead Annual 7.5% of variable cost *Seed includes insecticide and fungicide treatment. EB1667$Page 27

31 TABLE 3E. ITEMIZED COST PER ACRE FOR GRAIN CORN FOLLOWING WHEAT IN THE COLUMBIA BASIN; CENTER PIVOT IRRIGATION PRICE OR VALUE OR YOUR UNIT COST/UNIT QUANTITY COST FARM VARIABLE COSTS $ $ SOIL TEST ACRE CORN SEED ACRE CUSTOM FERTILIZE ACRE NITROGEN (DRY) LB NITROGEN (LIQ) LB PHOSPHATE (DRY) LB ZINC LB POTASH LB SULFUR LB CUSTOM SPRAY ACRE HERBICIDE ACRE CUSTOM COMBINE ACRE CUSTOM HAULING TON CUSTOM DRYING TON IRRIG. WATER ACRE IRRIG. POWER ACRE IRRIG. REPAIR ACRE TRACTOR REPAIR ACRE TRACTOR FUEL/LUBE ACRE MACHINERY REPAIRS ACRE MACHINE FUEL/LUBE ACRE LABOR(TRAC/MACH/IRR) HOUR OVERHEAD ACRE INTEREST ON OP. CAP. ACRE TOTAL VARIABLE COST FIXED COSTS $ $ TRACTOR DEPRECIATION ACRE TRACTOR INTEREST ACRE TRACTOR INSURANCE ACRE TRACTOR TAXES ACRE TRACTOR HOUSING ACRE MACHINE DEPRECIATION ACRE MACHINE INTEREST ACRE MACHINE INSURANCE ACRE MACHINE TAXES ACRE MACHINE HOUSING ACRE MANAGEMENT FEE** ACRE LAND RENT ACRE TOTAL FIXED COST TOTAL COST *SEED INCLUDES INSECTICIDE AND FUNGICIDE TREATMENT. **7% OF EXPECTED GROSS RETURNS (5 TONS X $125 X.07) EB1667$Page 28

32 TABLE 4E. BREAK-EVEN SELLING PRICE PER TON OF GRAIN CORN FOLLOWING WHEAT PRODUCED IN THE COLUMBIA BASIN UNDER CENTER PIVOT IRRIGATION COST PER YOUR BREAK-EVEN YOUR ACRE FARM PRICE ($/TON) FARM $ $ (5 TONS) $ 1. TOTAL VARIABLE COST PLUS: INSURANCE.91 TAXES 2.74 LAND RENT TOTAL CASH COSTS PLUS: DEPRECIATION TOTAL CASH COST & DEPRECIATION PLUS: INTEREST HOUSING 1.53 MANAGEMENT TOTAL COST EB1667$Page 29

33 TABLE 5E. SUMMARY OF RECEIPTS, COSTS, AND PROFITABILITY PER ACRE FOR PRODUCING GRAIN CORN FOLLOWING WHEAT IN THE COLUMBIA BASIN UNDER CENTER PIVOT IRRIGATION VALUE OR YOUR PRICE/UNIT QUANTITY COST FARM GROSS RECEIPTS GRAIN CORN $ TONS $ TOTAL RECEIPTS $ LESS: TOTAL VARIABLE COST $ LAND RENT $ RETURNS OVER VARIABLE COST AND LAND RENT $ LESS: FIXED COST $ NET RETURNS TO MANAGEMENT AND RISK $ EB1667$Page 30

34 TABLE 1F SCHEDULE OF OPERATIONS AND ESTIMATED COSTS PER ACRE FOR SILAGE CORN FOLLOWING WHEAT IN THE COLUMBIA BASIN; CENTER PIVOT IRRIGATION. VARIABLE COST TOTAL FUEL, TOTAL MACH LABOR FIXED LUBE, & VARIABLE TOTAL OPERATION TOOLING MTH YEAR HOURS HOURS COST REPAIRS LABOR SERVICE MATER. INTER. COST COST $ $ $ $ $ $ $ $ DISC & PACK 200HP-WT, 20' OFFSET DISC&PACK NOV IRRIGATE CENTER PIVOT, 36 AC. IN. SEA SOIL TEST CUSTOM TEST MAR FERTILIZE CUSTOM APPLICATION APR DISC & PACK 200HP-WT, 20' OFFSET DISC&PACK APR PLANT* 85HP-WT, SIX-ROW PLANTER MAY HERBICIDE CUSTOM APPLICATION MAY RESERVOIR TILL 200HP-WT, 6R-DAMMER/DIKER MAY NITROGATION THROUGH SPRINKLERS (75#) JUN NITROGATION THROUGH SPRINKLERS (75#) JUL CHOP & HAUL CUSTOM CHOP & HAUL SEP PICK-UP 3/4 TON ANN OVERHEAD UTILITIES,LEGAL,ACCT.,ETC. ANN LAND COST LAND RENT ANN MANAGEMENT 7% OF EXPECTED GROSS RETURNS ANN TOTAL PER ACRE *SEED INCLUDES INSECTICIDE AND FUNGICIDE TREATMENT. EB1667-Page 31

35 Table 2F. Materials and Services Used by Operation for Producing Silage Corn Operation Material and/or Service Irrigate Season Irrigation $30.50/acre Irrigation $64.30/acre Irrigation $10.00/acre Soil test March Custom $1.50/acre Fertilize April Custom $5.00/acre 150 lbs. of nitrogen 34 /lb. 100 lbs. of phosphate 25 /lb. 100 lbs. of 14 /lb. 15 lbs. of 10 /lb. 3 lbs. of $1.05/lb. Plant May Corn $30.00/acre* Herbicide May Custom $5.50/acre $25.00/acre Nitrogate June 75 lbs. of nitrogen 35 /lb. Nitrogate July 75 lbs. of nitrogen 35 /lb. Chop & Haul Late Sept. Custom chop & haul 30 Early Oct. $6.50/ton Overhead Annual 7.5% of variable cost *Seed includes insecticide and fungicide treatment. EB1667$Page 32