Crop prices and operating cost estimates are based on FAPRI Representative Farms data, survey information from a variety of sources such as University of Missouri (MU) extension specialists, farm supply dealers, producers, USDA cost data, machinery economic-engineering cost estimates and FAPRI economic baseline projections.
October 2007 supply/demand projections suggested favorable grain and soybean price outlooks for 2008 crop production. These long-range price projections were adjusted to provide estimated average Missouri farm prices. However, volatile markets can result in prices higher or lower than those used in the budget. Prices received also depend upon changing market outlook and timing of sales. Basis (spread between cash and futures prices) also varies considerably and can result in notable differences in cash bids at different locations.
Real estate charges are calculated as capitalized rent returns on estimated land value. In recent years, the capitalization rate has tended to decline as land prices were bid up and cash rent increases lagged behind the land price increases. However, with sharply higher grain prices during the past year, landowners have indicated a desire to "catch up" by increasing rents to capture a larger share of land returns resulting from higher grain prices. Estimated real estate values are determined by the MU and USDA land value and rent surveys. The landowner's costs (taxes, insurance, etc.), along with returns on investment, would be covered by the capitalized returns on the land value.
Crop Production Budgets
The crop budgets are based on typical production practices and machinery
used by farms with 1700-2000 crop acres located in north, central and
southwest Missouri. Smaller farms that use smaller equipment and custom
hire more field operations tend to have somewhat higher per acre production
costs. Larger farms that have larger equipment and gain some economies of
scale in volume input pricing may have lower production costs per acre.
Southeast Missouri farm size, equipment mix and production practices also
differ slightly. Corn, soybean and grain sorghum budgets assume one or two
tillage passes prior to planting. Wheat and double-crop soybean budgets
assume no-till planting. Emerging trends (included in the budgets) appear
to be use of split herbicide applications, increasing ownership of spraying
equipment, precision agriculture technology and semitrucks.
Forage Budgets
Forage crop mix, forage acres per farm, and equipment lines tend to be somewhat different in northern and southern Missouri. Northern crop/livestock farms tend to have fewer forage acres than southern Missouri farms, which are primarily livestock (beef/dairy). Since northern forage producers have more grain crop acres, larger tractors are often used in northern forage production. Although tractor size may be smaller, southern farms tend to have more forage acres and more items of forage equipment. The southern Missouri climate is also better adapted to some warm season forages and fescue seed production.
Crop and Forage Price Estimates for 2008/09 Budgets
Used in
Budgets Estimates for Regional Basis Adjustment
Central NE Mo. NW Mo. SW Mo. SE Mo.
Corn, bu. $ 3.15 $3.15 $3.15 $3.00 $3.25 $3.30
Soybean, bu. $ 7.90 $7.90 $8.05 $7.75 $7.80 $8.40
Wheat, bu. $ 3.90 $3.90 $3.90 $3.90 $3.09 $4.10
Grain sorghum, bu. $ 3.02 $3.02 $3.02 $3.00 $3.20 $3.20
Corn silage, ton $ 28.35
Alfalfa, round bales, ton $120.00
Premium pasture, AUM $ 9.00
Cost Estimates Used in 2008 Crop and Forage Budgets
Diesel fuel, farm delivered $2.70/gal.
Gasoline $2.90/gal.
L.P. gas $1.85/gal.
Electricity $0.08/kwh
Anhydrous ammonia $0.33/lb.
Urea $0.52/lb.
Ammonium nitrate $0.57/lb.
2 5 Phosphorus (P 0 ) $0.36/lb.
2 Potassium (K 0) $0.28/lb.
Lime $6 to $13/ton
Operating interest rate 8.00%
Unskilled labor (tractor driving, tillage, mowing, etc.) $11/hour
Skilled labor (planting, combining, spraying, etc.) $16/hour
Real estate charges as % of land value (capitalization rate):
Crop production 5% of land value
High quality forage production 3.8% to 4% of land value
Grass production 2.1% to 2.2% of land value
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Projected Corn and Grain Sorghum Budgets for Crop Year 2008
Dryland Irrigated Grain
Corn Corn Sorghum
Yield/ac.: 155 bu. 200 bu. 110 bu.
Market price/bu.:* $3.15 $3.15 $3.02
ESTIMATED INCOME/ACRE
Grain sales (yield x price/bushel) $488.25 $630.00 $332.20
Net payments (fixed) 14.15 14.15 14.15
ESTIMATED TOTAL INCOME/ACRE $502.40 $644.15 $346.35
ESTIMATED OPERATING COSTS/ACRE
Seed $ 60.00 $ 72.00 $16.74
Fertilizer and soil amendments 88.10 111.80 67.20
Crop protection chemicals 26.18 26.85 27.00
Crop supplies, storage, marketing 1.00 1.00 1.00
Crop consulting and insurance 18.00 -- --
Custom hire and rental 4.50 4.50 4.50
Machinery fuel, drying and irrigation energy 32.10 64.65 16.41
Machinery repairs and maintenance 18.74 38.84 12.33
Operator and hired labor 14.80 20.40 12.11
Operating interest @ 8.75% x ½ year 10.56 13.60 6.29
_______ _______ _______
Total Operating Costs/Acre $274.65 $353.64 $163.58
ESTIMATED OWNERSHIP COSTS/ACRE
Farm business overhead $ 3.73 $ 3.73 $ 3.73
Machinery overhead 26.11 46.22 19.48
Machinery depreciation 35.82 55.97 23.96
Real estate charge 107.50 132.75 84.00
_______ _______ _______
Total Ownership Costs/Acre $173.75 $290.50 $182.78
ESTIMATED TOTAL COSTS/ACRE $447.81 $592.31 $294.75
____________________________________________________________________________________
Income over Operating Costs/Acre $227.75 $290.50 $182.78
Income over Total Costs/Acre $ 54.59 $ 51.84 $51.60
____________________________________________________________________________________
Operating costs/bushel $1.77 $1.77 $1.49
Ownership costs/bushel $1.12 $1.19 $1.19
Total costs/bushel $2.89 $2.96 $2.68
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* Projected (Oct. 2008) average Missouri cash prices for
the 2008/09 crop marketing year. Basis varies considerably across the
state. Adjusting cash price to reflect appropriate local basis is
recommended.
These budgets and the budget calculator are available on the web
for download at http://www.fapri.missouri.edu
Prepared by Melvin Brees, Brent Carpenter, and Scott Gerlt, FAPRI
Missouri.
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Projected Soybean and Wheat Budgets for Crop Year 2008
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