Purdue Extension agricultural economists are urging farmers to calculate estimated budgets for the 2014 cropping year and to help with the process they have released the 2014 Purdue Crop Cost and Return Guide. Michael Langemeier, Purdue Extension agricultural economist, says there are two main drivers in the 2014 guide compared to the 2013 edition, and the first of those is the drop in corn, soybean, and wheat prices.
“That of course is having a large negative impact on market revenue and contribution margins for corn, soybeans and wheat. The second factor is more positive and that’s the expected decline in fertilizer costs. Now we haven’t changed the fertilizer amounts in the guides but the fertilizer prices are quite a bit lower right now compared to what they were last fall when we were working on the 2013 guide.”
The guide is a general guide and is not specific to any particular farm.
“It gives a person an idea of how market revenue should be computed. Market revenue is pretty simple. It’s usually price times yield, and it gives an idea of how we did it, using current futures prices and trend yields. That’s how we calculate market revenue in this guide. More importantly, it gives someone an idea of the important costs that need to be included and how you would calculate those costs for a specific farm, for a specific field and for a specific enterprise, such as rotation corn.”
There are numerous illustrations in the guide and he says probably the most important are the illustrations to calculate overhead costs. It is available for free download from the Purdue University Center for Commercial Agriculture website and the guide is updated frequently as grain futures prices change and the costs of inputs fluctuate.
According to guide estimates, revenues for rotation corn on average-productivity land could fall by $140 per acre compared with 2013. Rotation soybean revenues on average-productivity land could fall by $35 per acre.
Those changes in grain prices and input costs mean it’s even more important for growers to estimate their budgets for the next year, Langemeier said. As it looks now, rotation soybeans could be more profitable than continuous corn for some farmers in the coming year.
“Rotation soybeans are looking very attractive for 2014, so we could see more rotation soybeans than continuous corn,” he said.
Right now, the per-acre contribution margin (revenue minus variable costs) for rotation soybeans on average land is an estimated $395, while continuous corn is $277. Those numbers could change, however, as the 2013 cropping season wraps up.
Source: Purdue Ag Communications