Page 42-Corn Talk, Lancaster Farming, Saturday, February 13,1993 Jayson K. Harper Assistant Professor Agricultural Economics Penn State Gregory W. Roth Assistant Professor Agronomy Penn State Crop enterprise budgets are an important farm management tool. Budgets summarize the cost of production and the returns from a given crop enter prise. Budgets can be deve loped as 1) projections prior to planting and 2) after harvest to check the economic perfor mance of the crop enterprise. In this way, budgets can be used to 1) estimate cash flow, 2) pro vide a basis for credit, 3) assist in farm planning, and 4) deve lop least cost feed rations. They can also be used to help indicate possible areas of inefficiency on your operation. The infor mation contained in these sum maries along with farm specific data can be used to help deve lop com cost of production pro jections for the 1993 growing season. Budgets for other crops on your farm can be developed in a similar manner. Land changes have not been reported in any of the budget summaries. Because land charges (princi pal and interest payments, tax es, rent) are so variable and location specific, the bottom line has been reported in these summaries as “Returns to Land and Management”. When pre paring your own budgets, land charges should be included so that all relevant costs are con sidered when gauging the per formance of the crop enterprise. The agricultural value of the land should be used rather than the market value. Market value includes the “development” or “speculative” value of the land, which the com enterprise should not be expected to cover. Table 1 contains statewide budget summaries for corn grain and silage. Averages, standard deviations, and ranges are given for each budget item. The standard deviation and range give us an idea of the var iability of the budget data. The standard deviation can be used to construct confidence inter vals for the average values. We would expect about 68% of all farmers to fall within ±1 stan dard deviation of the average, 95% to fall within ±2 standard deviations, and 99.7% to fall within ±3 standard deviations. For instance, using the returns to land and management from Table 1, we would expect 68% of the grain farmers to fall between $57.64 and $265.04 per acre. The range gives the lowest and highest values reported for each budget item. The results indicate grain far mers spent $31.34 more on average to grow the crop and silage farmers have slightly more money tied up in machin ery. The high returns from sil age arc somewhat misleading, in that only limited opportuni ties for selling silage may exist 1992 Corn and transportation costs asso ciated with the sale of silage have not been included. Table 2 contains regional budget summaries for corn grain. The state was broken down into four regions com prised of counties with roughly similar production characteris tics. The four regions, 1) South east, 2) Central Valley, 3) Northeast, Northern Tier and, Central Mountains, and 4) West, are shown in Figure 1. The results indicate that in 1992, Southeast farmers pro duced com for the lowest cost per bushel on average, due to their having the highest average yield and lowest cost of produc tion of the four regions. Table 3 contains budget summaries for corn grain by tillage practice. The three til- Tabic 1. Grain and Silage Budget Summaries, Five Acre Corn Club, 1992 Crop Year Grain Prediction Budget Senary (54 mordi) Standard PevUUne Itctipt Yield (bu.) Price (SAu.) Deficiency Payment ttvwNrCotfr Seed Femliur PiepUni Sutler SxMmi Lane Herbicide [(•ecocide Machinery Opcrab*| Cram Drying Cudom Hue Pud Labor MiaecUmoeua IntercM on Operating Capua! Fu*4Co*t Machinery Ownmkip $3170 Breakeven Price ($/bu) Breakeven Yield (buJA) Nete. Land Chatgn have not ban included in the calculations for Breakeven Pries or Breakeven Yield n/a. not applicable T«bk 2. 6nlo Budget Summirlu, by Production Region, Five Acre Corn Club, 1992 Crop Year Saulbenat (M recordc) Standard Deviation feetipii Yield (bu.) Price (SAu) Deficiency Payment VsnMeComi SMd FcmJucr Preplan! Starter Sidcdicu Lime Ketbicide Intact icidc Machinery Operating Giaia Drying CuatonHm Rani Labor MtawUaMoua Intaraai on Operating Capital Fut4Coot MachMty Ownanhip 53213 ■leakeven Price (5A4 ) Bretkrvtn Yield i Note- Land Chaigct have not bean included fat the cakulabeM for Breakeven Price or Breakeven Yield. Tabic 3. Grain Budget Summaries, by Tillage Practice, Five Acre Corn Club, 1992 Crop Year Conventional Tillage (29 records) Averai tec tips. 150.1 $126 $0.09 Yield (bu.) Price (S/bu.) Deficiency Payment Ultras Variable Costs: Seed Fertilizer Preplant Starter Sidedress Lime 523.6 S Herbicide Inaccticide Machinery Operating Grain Drying Cualom Hire Paid Labor Miscellaneous Interest on Operating Captial Fund Costs: Machinery Ownership $3971 $O3 Breakeven price (SAm.) Breakeven Yield (btiVA) Note Land Charges have ml been included m Ibe calculations for Breakeven Price or Breakeven Yield. Club Budget Summary lage practices represented in the budgets are conventional tillage, minimum tillage, and no-till. In 1992, no-till farmers reported the highest yields, fol lowed by minimum tillage. Tot al variable costs were highest for minimum tillage, followed by no-till. As expected, herbi cide costs are higher and machinery operating expenses lower under no-till. Farmers using minimum tillage reported higher cost for crop drying, while no-till farmers had the highest custom hire charges. Machinery ownership costs were almost twice as high on average for conventional and minimum tillage as no-till. The difference in total cost, along with the higher yield, made no li 11 the most profitable on aver age in 1992. Sh|t mdHcltoi BuritM S«MV7 (11 rmrti) Range Low 23.3 $21.09 $22,94 MO DO ISJI SIS 13 5122 it o» him 13J2 $27.34 512941 549D2 Nwlhaast, Narthara Tkr, aad Cnlral Mauatalas (tl morns) Central Vaßey (Id record*) SliaSird Pavlatloa 543 10 SIM Minimum Tillage (19 records) Slaadard Deviation Slaadard Pevlatloß Averai 77 JO $022 $O.ll 164.1 $2.29 $O.Ol 36.6 $O2l $0.21 s32s $22.94 $O9 $1903 $40.10 $14.92 $039 $1.46 $1.07 Standard Deviation lUaga Iw I HI 324 $40.00 190 $3OOO nft $13.44 $33.79 *977 S7J2 sun J4J9 $13,0 U 2) SI37S son saoo saoo sioo saoo saoo St 15 $2440 S2IXO S3OXO SIIXO 549J9 SI4XO $32.19 SIOJI $1039 $13.03 SIJO $32.40 S3OXO S44XO $441 $2441 $102X4 I Weal 1(14 racordi) SliidiN Ddvkltoß Slaadard Pavlalloa 523J7 S2OJ3 517.53 54323 No-TIU (6 records) Standard Deviation Averai 213 $0.17 SOM 1736 $124 $O.OO 515.91 $27.79 $2009 $1233 $1.16 $023 Table 4. Grata Budget Summaries, by Yield Level, Five Acre Corn Club, 1992 Crop Year Top 25% (14 record*) Standard Devhti— ftCtifil Yield (ku.) fnu <S/bu.) Deficiency Payment Vmit^UCHU Saad Fertilizer Pieplant Suiur SidaJreu Lune Hufeodt laaaetieida Machinery Operating Oiatn Drying CuitomHua Paid Labor MimDanaoua Inlereti m Operating Capnil 12410 FUtdCoMt Machinery Ownenhip 534.20 ■teak even Pne* (S/Vj ) Breakeven Yield i Note* Land Chti|ei have nal been included in the calculation* for Breakeven Price or Breakeven Yield. Table 4 contains budget summaries for corn grain by yield level. Com cost of pro duction is broken down by four yield levels representing the top 25% of yields in 1991, the high middle 25%, the low middle 25%, and the bottom 25%. Tot al variable costs did not vary between yield levels as much in 1992 as they did in 1991. Machinery ownership costs were highest for the lowest yielding group and very similar for the other yield groups. As in 1991, the highest yielding group had the highest returns to land and management and the lowest breakeven price. Table 5 contains budget summaries for corn grain by soil productivity group. Soils in Pennsylvania can be classi fied into five soil productivity groups. Group I soils are char acterized as being well-drained and have a depth of greater than 40 inches. Group II soils can Ttbk S. Grail Budget Summarka, by Soil Productivity Group, five Aero Corn Chib, 1»92 Crop Ym Group 1 (23 records) Averai Receipts Yield (bu.) Price (S/bu.) Deficiency Payment Grom Relume S4Q4 49 Variable Costs: Seed Fertilizer Preplan! Starter Sidedreaa Lime Herbicide Insecticide Machinery Opcretini Grain Drying Custom Hire Paid Labor Miscellaneous Interest on Operating Capdal $24.77 Total Variable Coal \lTslt Fixed Corns: Machinery Ownership Breakeven Price (S/bn.) Breakeven Yield Note: Land Charges have not been included in the calculations for Breakeven Pnca or Breakeven Yield. Igurc 1. Pennsylvanie Five Acre Corn Club Budget Regions H%hMMdlt3s% (Idrnearda) Standard Devlaitan SUjOO $1023 $3394 either be moderately well drained soils with a soil depth of greater than 40 inches or well-drained soils with a soil depth of between 20 and 40 inches. Group 111 soils can be either moderately well-drained soils with a soil depth of 20 to 40 inches or well-drained soils with a soil depth of less than 20 inches. No budgets for Group IV or V soils were requested for 1992. Farmers producing com on Group I soils had the highest yields on average in 1992 at 171.4 bu./A. Farmers growing com on Group II soils reported the lowest average yield and a higher cost of production than farmers on Group I soils. The difference in returns to land and management between Group I and II soils was about $32 in 1992. The differences for Group 111 soils when compared to Groups I and II soils are very evident: total costs are higher and returns to land and manage ment are substantially lower. Group n (7 records) Standard Deviation Averai 171.4 $127 $OO6 243 5022 $O3l 141.7 sl2t sa26 $9341 $31330 $167 $2339 >171.62 SI6J3 $43.97 SL4S UmmiS* (14 new*) (Urtaerdt) SUW>r4 DwUll— Standard Pa via tlan $2341 Group 111 (llrocorde) Standard Deviation Standard Deviation Averai 263 $Ol4 $033 1314 $132 $0.04 32.9 $036 $0.14 $10332 $33633 $7236 $9.06 $2331 1119.46 $14.17 $17.74 $43.94 SOJt $O5l
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