Organic Crop Production Costs for 2018 Manitoba Ag Days January - PowerPoint PPT Presentation

Organic Crop Production Costs for 2018 Manitoba Ag Days – January 18, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Roy Arnott , P.Ag. Farm Management Specialist

What we already know… • Doing your cost of production for your own farm is the starting point for profitability. • Determining your cost per bushel sold will allow you to build an effective marketing plan. • Each year is different! Profitability and risk is dependent on the relationship between yield/price/costs with your financial situation. (Plan for Prosperity)

Outline:  Grain Markets & Yields  COP Summary & Analysis  AgriInsurance Analysis  Organic vs. Conventional  Land Rental Cost – How Much is Too Much?  CropPlan Calculator & Other Tools

2018? Good, Bad or Ugly? CAUTION: CAUTION: Objects in the Mirror are Objects in the Mirror are Closer Than They Closer Than They Appear! Appear!

Manitoba Organic Breakeven Yields (per Acre) ‐ 2017 210.0 198.1 200.0 190.0 180.0 170.0 160.0 150.8 150.0 140.0 Yield Per Acre 130.0 120.0 110.0 100.0 90.0 80.0 70.0 60.0 45.5 50.0 40.0 31.4 30.0 19.0 17.1 20.0 13.4 12.2 11.5 8.6 8.5 6.2 10.0 0.0 Hemp Winter Wheat Wheat Brown Flax Oats Soybeans Breakeven Yield Over Operating Costs Breakeven Yield Over Op & Fixed Costs

Manitoba Breakeven Price ($/unit) ‐ 2017 $12.00 $11.21 $10.00 $9.36 $9.10 $8.00 $6.49 $6.35 $/Unit $5.72 $6.00 $5.68 $4.10 $4.00 $3.50 $2.80 $2.43 $2.00 $1.51 $0.00 Canola Winter Wheat Wheat Flax Oats Soybeans Operating Costs Operating & Fixed Costs

Fixed Cost Management ‐ Conventional • Gross Revenue = Price x Yield Per Acre Margin Over Operating 35% • Margin Over Operating Cost = Gross Revenue – Operating Costs Operating Costs 65%

Fixed Cost Management ‐ Conventional Owner Withdrawl 5% Equipment Cost 12% Land Cost 18% Operating Costs 65%

Fixed Cost Management ‐ Organic • Gross Revenue = Price x Yield Per Acre Operating Costs 43% • Margin Over Operating Cost = Gross Revenue – Operating Costs Margin Over Operating 57%

Fixed Cost Management ‐ Organic Owner Withdrawl 27% Operating Costs 43% Equipment Cost 12% Land Cost 18%

Cash Rent Based on Gross Revenue • Average range of cash rent across western Canada is 18 to 22% of gross revenue. • But how much is too much???

Breakeven Land Rent Calculation Gross Revenue ‐ Operating Cost ‐ Equipment Cost ‐ Labour Cost ‐ Storage Cost = Cash for Land Rental

Land Rent Based on Investment Return on Land Value (Landowner check & balance) Land market value $2,800 per acre x Long Term Investment Rate (5yr) 2.75 % + Property taxes $15.00 per acre Total Cash Land Rental $92.00 per acre

Analysis specific to your own farm

Reseeding Decision Tool - Canola *** Enter/select changes to items in BLUE only *** Farm Information: MASC - Risk Area RA #2 MASC - Soil Zone E MASC - Individual Productivity Index (IPI) 1.00 MASC AgriInsurance Coverage level 80% Calculated MASC Probable Yield (bu/ac) 34.6 Original Crop Canola Reseeded Crop Canola Estimated Market Price ($/bu) $10.89 Plants/m 2 Damaged Canola Plant Stand Evaluation: Field Sample Plant Counts/m 2 15 * enter up to (5) plant counts in the boxes to the right * leave entries blank if less than (5) counts were taken * 10.8 plants/m 2 = approx. 1 plant/ft 2 Average Plant Count/m2 15.0 Plant Count - Yield Factor 0.75 Estimated Yield (bu/ac) 26.0 Estimated Gross Revenue ($/ac) $282.60

Reseeding Decision Tool - Canola Canola Reseeding Evaluation: Reseed Date 1st week June Date - Yield Factor 0.8953 Estimated Reseed Yield (bu/ac) 31.0 Estimated AgriInsurance Reseeding Indemnity ($/ac) $75.36 Estimated Seed Company Reimbursement ($/ac) $0.00 Reseed Seed Costs ($/ac) $60.00 Reseed Machinery Costs ($/ac) $15.00 Estimated Gross Revenue ($/ac) $337.95 (net reseeding indemnity, reimbursements & expenses) Estimated Benefit (Cost) of Reseed Decision ($/ac) $55.35

Farm Software & Worksheets (Crops) • Farm Machinery Custom & Rental • http://www.gov.mb.ca/ Rate Guide Calculator ‐ 2016/17 agriculture/business ‐ • Crop Land Purchase Values – 2016 and ‐ • Crop Land Rental Rate ‐ 2016 economics/financial ‐ • Crop Share Lease – 2017 management/farm ‐ • FertPlan ‐ 2017 software ‐ and ‐ • Grain Bin and Farm Building Rental worksheets.html Cost Planner • Grain Drying Cost Calculator • Sclerotinia Treatment Decision Tool (Canola and Sunflower versions)

Obviously you’re telling me… • Those who produce the most, profit the most. • The more accurate your own numbers, the greater your chances are for profitability. • It’s vital to know the risks and rewards of the different crops. • Before seeding, compare crops for profit probability . • After seeding, update your actual costs to keep on top of profitability

Questions ? For more information Visit our website: www.manitoba.ca/agriculture Follow us on Twitter: @MBGovAg View our videos on YouTube: www.youtube.com/ManitobaAgriculture Contact me: Roy Arnott, P.Ag. roy.arnott@gov.mb.ca Killarney Ag Office ‐ 204.523.6424