The Roundup -

NDSU Projects Crop Profits For 2022

2022 projected profits vary by region & crop.

 

February 23, 2022 | View PDF

NDSU Extension projected crop budgets are guides for large multicounty regions. (NDSU Photo)

The North Dakota State University (NDSU) Extension projected crop budgets for 2022 are available for the state's farmers, says Ron Haugen, NDSU Extension farm management specialist.

The 2022 projected profits vary by region and crop.

"The budgets are guides for large multicounty regions," says Haugen. "Returns and costs can vary considerably between producers within a region. Also, the budgets estimate returns to labor and management with no consideration of price and yield variability or risk. A perfect comparison of crops is not achieved because different levels of labor and management and risk exist."

Generally, most crops in all regions have improved profit from the previous year. With the increase in all commodity prices, the bottom line looks good.

"On a negative note, there has been substantial increases in fertilizer prices and pesticide prices, especially Roundup and Liberty," says Haugen. "Because of the 2021 drought, regional soil tests show large increases in soil nutrients compared to average. Thus, fertilizer rates can be reduced on higher fertility soil."

In general terms, crops like corn that are big fertilizer users are the hardest hit. Also, crops that require high pesticide usage show significant cost increases.

"Specialty crops may show a positive return, but usually have limited contracts and acreages, and also may have higher risk," says Haugen.

"Generally, for most crops, the projected total costs per acre have increased substantially," he adds. "Fertilizer costs per acre have had the most increase, even with lower applied rates on soils with higher nutrient carryover. Pesticide costs have also had a significant increase. Seed, fuel, repairs and ownership expenses have also had increases. Cropland rents for most regions are flat."

The NDSU Extension-developed budgets are available online at http://www.ndsu.edu/agriculture/ag-hub/ag-topics/farm-management/crop-economics/projected-crop-budgets or by searching online for NDSU Crop Budgets.

NDSU Extension also offers an updated Crop Compare Program for 2022, which is a spreadsheet designed to compare cropping alternatives.

The program uses the direct costs and yields from the 2022 projected crop budgets for nine regions of North Dakota, but farmers are encouraged to enter the expected yields and input costs for their farm.

The user designates a reference crop and enters its expected market price. Depending on the region, a broad selection of nine to 18 crops are compared. The program provides the prices for competing crops that would be necessary to provide the same return over variable costs as the reference crop.

"Producers can compare these 'break-even' prices to expected market prices to see which crop is most likely to compete with the reference crop," says Haugen. "The program provides a tool for farmers to check changing scenarios until final planting decisions are made."

The program includes an underlying assumption that fixed costs, such as machinery ownership, land, and the owner's labor and management, do not vary among crop choices, and therefore do not need to be included in the analysis.

"In practice, there may be differences in fixed costs that should be considered," says Haugen.

"For example, there may be additional labor, management and risk associated with a competing crop," Haugen adds. "If all the labor and management is provided by the owner-operator, it would be considered a fixed cost and could be excluded. However, the farmer should add some cost if he or she would only want to produce the crop when an adequate reward would be received for the extra time and management required relative to the reference crop."

A similar rationale could be used if a competing crop is considered higher risk.

The Crop Compare program is available online at http://www.ndsu.edu/agriculture/ag-hub/ag-topics/crop-production/tools/crop-compare.

 

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