Yield will be critical to make 2001 crop budgets work

For the fourth consecutive year, crop budgets prepared by NDSU for 2001 suggest a strategy of growing oilseeds, subject to rotation limitations, that are best suited to a particular growing area. Even though loan rates are more attractive than for wheat or feed grains, higher-than-average yields are still needed to garner a solid net return, says Andrew Swenson, NDSU extension farm management specialist.

Soybeans project a positive return in the southern Red River Valley, southeast and south central regions, and nearly breakeven in the northern Red River Valley. In the northern regions outside of the Red River Valley, Swenson advises producers to look closely at flax because of lower production costs and fewer disease concerns than sunflowers and canola. Also in these northern regions, field pea is projected to generate a loss, but acreage may hold because of low fertilizer needs.

Only the minor crops, lentils—garbanzo beans, crambe, mustard, buckwheat and safflower—projected positive returns in the western regions. Confectionery sunflowers and dry beans showed the best returns in central and eastern regions. However, most of these crops have significant production and price risks, Swenson cautions. If a price is attractive, it is a good policy to contract a crop that has a thin market, he advises. For example, millet shows a decent profit in the south central region at $6 per hundredweight.

Relative to other regions, profit projections are worst in the Red River Valley counties because yields are not high enough to offset the additional costs, primarily land rent.

Swenson cautions that projections are just that. Last year the southern half of the state had very good yields and achieved profits much better than projections. This year, the projections do highlight the financial risk of raising a crop in 2001. This year’s crop budgets will be pressured by increased fuel, fertilizer and machinery costs. On the other side of the coin, crop insurance will cost less than last year, interest rates are relatively flat and land costs in some northern regions have softened, Swenson says.

“If yields are less than average there will be significant revenue shortfall per acre and the impact is magnified because farms are larger than in the past. It is critical to evaluate crop insurance and consider the financial downside risk, as well as the upside potential, of the crop rotation,” Swenson says.

For More Information
Producers can access the NDSU budgets online at http://www.ext.nodak.edu/extpubs/ecguides.htm. The budgets are also available at county NDSU Extension Service offices.