NDSU Extension Service, Published January 05 2011
ND crop return projections positive for 2011FARGO - Strong crop prices more than offset higher costs to project profit for 2011 in all regions of North Dakota, according to Andy Swenson, North Dakota State University Extension Service farm management specialist.
Another positive revenue factor is that crop yields have been increasing through time. For example, in the east-central region, the yield used for wheat increased from 34 bushels per acre in the 2006 budget to 44 bushels per acre in the 2011 budget. The projected corn yield increased from 89 to 104 bushels per acre during this period. However, soybeans remained flat at 30 bushels per acre.
However, soybeans projected the best profit in the northern and southern Red River Valley and the southeastern and east-central regions because of a strong soybean price and substantially less fertilizer costs relative to wheat or corn. Corn was competitive with soybeans in these regions. Wheat ranked third in the northern Red River Valley, with a $66 return to labor and management. Confectionery sunflowers ranked third in the southeastern and southern Red River Valley regions, followed by wheat.
Canola looks best in the northeastern region with an $83 return to labor and management, followed by confectionery sunflowers, flax, soybeans, malting barley and wheat, with returns from $76 to $57 per acre. The top five ranked crops in the south-central region (confectionery sunflowers, soybeans, malting barley, canola and winter wheat) project returns to labor and management greater than $60 per acre.
Lentils project returns close to $100 in the north-central and western regions. Small chickpeas and corn in the western regions and confection sunflowers and soybeans in the north-central region look strong.
However, corn in the western regions has high production risks, and crop insurance is only available by written agreement. Other crops projecting returns to labor and management greater than $50 per acre are malting barley and canola in the northwestern region, malting barley in the southwestern region, and canola, malting barley, dry beans, flax and winter wheat in the north-central region.
"A negative for 2011 are costs," Swenson says. "Production costs have been a roller-coaster the past few years. On average, total costs per acre were up nearly 30 percent in 2008, fairly level in 2009 and declined about 10 percent in 2010. In 2011, total costs are projected to increase about 15 to 20 percent for canola and small grains, such as barley, wheat, durum and oats; 10 to 15 percent for corn, sunflowers and flax; and 5 to 10 percent for soybeans, dry beans, lentils and field peas."
Fertilizer is the main cost culprit, with producer outlays expected to be 50 percent greater than last year. Fuel and crop insurance expenditures probably will increase by 20 percent or more. Seed costs are mixed. For example, projected seed price increases are 40 percent for flax, 30 percent for small grains and about 7 percent for canola but only 3 percent for soybeans. Corn and field pea seed will be nearly unchanged, and dry bean seed will cost less than one year ago.
On average, pesticide prices will be similar to last year. However, with good profit potential, it is expected that producers will be more willing to spray and/or select better products to protect their crops.
Swenson cautions that projections are best guesses at a point in time (Dec.15). One year ago, projections for 2010 were substantially lower than current projections for 2011. However, yields and prices were better than projected for 2010.
"Yields and crop prices will, as usual, be the main wild cards in determining the accuracy of 2011 projections," Swenson says. "I encourage producers to develop their own budgets. It also is important to evaluate your crop insurance and consider the financial downside risk, as well as the upside potential of different possible yields and prices."
It is important to note, when considering crop selection, that these budgets do not provide a pure apples-to-apples comparison among crops. Differences in operator labor and management requirements, and in production and marketing risk, are not considered. Also, rotational advantages, such as nitrogen credits for soybeans and pulse crops, and rotational disadvantages, such as the potential some crops have for disease buildup, are not considered.
The budgets are available on the Web at
http://www.ag.ndsu.edu/pubs/ecguides.html and county NDSU Extension Service offices.