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	Issue 29 May 2000


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	Prairie Grains is the official publication of the Minnesota Association of Wheat Growers, North Dakota Grain Growers Association, South Dakota Wheat, Inc. and the Minnesota Barley Growers Assocation.


	Copyright Prairie Grains Magazine May 2000

Foresight for Successful Cropping Systems

Crop selection 2000: Some final notes on economics before hitting the field

By Zachary Fore
U of M Extension Cropping Systems Specialist
zfore@extension.umn.edu

Crop selection should be based on a combination of economics and agronomics. The economics: You need profitability. The agronomics: You want crops that compliment each other in a rotational system and you want to minimize your production risk. Dr. Michael Peel, NDSU small grains extension agronomist, has done an excellent job of presenting the agronomics of crop rotations in NDSU Extension Bulletin EB 48 'Crop Rotations for Increased Productivity.' The bulletin is available on the web at www.ext.nodak.edu/extpubs/plantsci/crops/eb48-1.htm

The economics of crop selection have been problematic in recent years (How's that for an understatement?). See Exhibit A below: Northeast ND 2000 projected crop budgets. The numbers in Exhibit A are based on average yields for the eight-year period from 1991-1998 with the low and high yield years removed. The prices are best estimates, using the loan rate as a floor. Costs are average actual costs in the area. Government payments are not added in since they are decoupled from production.

Exhibit A: Northeast North Dakota 2000 Projected Crop Budgets
Crop	Yield Per Acre	Price per Unit	Gross Return per Acre	Costs per Acre	Net Return per Acre
Spring Wheat	29	3.13	91	114	-23
Durum Wheat	26	3.33	87	114	-27
Barley-Malt	51	2.13	109	113	-5
Corn	67	1.70	114	167	-53
Sunflowers - Oil	1260	0.092	116	127	-11
Sunflowers- Conf	1260	0.13	164	139	25
Soybeans	23	4.72	109	126	-17
Dry Beans	1260	.015	189	172	17
Oats	57	1.03	59	102	-43
Flax	20	5.26	105	104	1
Canola	1350	0.097	131	135	-4
Yellow Mustard	1000	0.106	106	93	13
Field Peas	36	3.24	117	126	-9
Crambe	1300	0.078	101	103	-2
Millet	1600	0.045	72	88	-16
Buckwheat	950	0.104	99	92	7
Alfalfa-Estab.	2.0	50	100	96	4

These are average numbers for the area, and it is likely that your numbers differ to some extent. However, what these numbers tell us is similar to what we see in most areas: Without AMTA and other government payments, on the average we are losing money on most crops. Of the 17 crops listed, 11 crops give a negative net return averaging -$19/A, and 6 crops give a positive net return averaging $6/A.

So, what should a farmer do? Grow just those 6 crops that give a positive net return? Most likely, you are not equipped to grow all these crops, and they may not fit in your rotational system. Market and production risk may be high on some of these crops, as well. And even the profitable crops only average a positive net return of $6/A.

To be profitable growing the crops in Exhibit A, you have to do one or more of the following:

• Get higher yields
• Get higher prices through improved marketing
• Have lower costs

I have studied many years of data which indicate that for most farmers, the biggest opportunity by far is to get higher yields. A distant second is to get higher prices through improved marketing, and last is to reduce costs. Obviously, improving all three will give you the best chance of profitability, but put the most effort where the potential benefits are highest on your farm.

There are two additional ways to improve profitability other than the three I just mentioned:

• Get higher prices through adding value
• Grow higher value crops than those listed in Exhibit A

You can add value to a crop by producing it for a specific use or with specific traits. Examples include producing a crop for seed, high oil or with specific oil quality, or for human consumption. Usually this will require identity preservation and/or certification.

Growing higher value crops may be the most financially attractive option of all. However, it is a difficult option because you will have to identify a market and buyer, and learn to produce the crop.

The bottom line: Improve your yields, improve your marketing, and manage your expenses. And keep in mind that future profits are increasingly going to come from adding value to what you produce, and producing and marketing crops in ways you haven't in the past.