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The Farm CPA

RSS By: Paul Neiffer, Top Producer

Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.

A Battle For Acres

Oct 06, 2010

It will be interesting to see which crop wins the battle for acres in 2011.  Right now, wheat, corn, beans and cotton are all enjoying much higher prices than last year.  The University of Purdue has calculated that the following returns above variable costs on high quality land are as follows:

  • Corn - $447,
  • Beans - $395,
  • Winter wheat alone- $336,
  • Double-cropped winter wheat / soybeans - $516

On low quality land, wheat alone edged out both corn and soybeans.

With fertilizer prices edging up, corn acres may go down since the return for other crops may be just as good or better with out the extra input costs.

Winter wheat acres have declined each of the past two years down to 37.3 million acres in 2009/10.  For the upcoming year, many estimates peg the wheat crop closer to 41 million acres.

A big incentive is to plant winter wheat and then double crop it with soybeans.   As the projected returns show above, that can get you the best return.  In 2008, about 9 percent of the bean crop was double-crop or about 6.8 million acres.  This year, this acreage had dropped to 2.4 million.  If wheat acres do go up by 4 million acres, then a lot of this will probably be double-crop beans.

Planting choices usually come down to which crop will yield that best return per acre.  Through mid-September, incentives to plant wheat were much larger than the last half of the month when most of the winter wheat crop is being planted.

With cotton prices near or over $1 per pound, many bean acres might go into this crop.

My best guess right now is that almost all crops will have higher acres due to higher prices.  Marginal land will be put into production that was not in production this year.

It will be interesting to see the final numbers.

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