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RSS By: Chris Barron

Chris BarronHave a margins question? Through this blog, you will gain insight into improving your bottom line, as a margins expert answers questions and provides farm business advice.

 

2012 Crop Acreage Plans

Dec 12, 2011

 

Deciding on which crop/acre mix will be most profitable can be a challenge in volatile times. Grain markets, cost of production, and yield prospects together create a moving target for making the best decisions. Planting the right balance of each crop is dependent upon your ability to manage these three variables.
How do you make decisions for your acre mix and crop rotations? There has been a big swing to more corn on corn production in many areas over the past few years. Some operations have gone 100% corn while others have increased by planting one or two additional farms to corn. When considering acreage plans and crop rotation management decisions should be specific to your individual needs, goals, and objectives.
There are a number of influencing factors which have led to the increase in corn acres. One of the most obvious reasons has been the price relationship between corn and soybeans. In visiting with many producers across the Corn Belt many tell me, “It would take an additional $2-$3 per bushel on soybeans relative to current corn prices to convince me to plant more soybeans.” 
Another factor influencing more corn on corn acres comes from numerous agronomic challenges with soybeans over the past few years. Insect pressure, disease, weather challenges, and the lack of consistency in yields have been challenging enough to sway farmers toward planting more corn. When there's a question, farmers seem to prefer planting corn.
Ask yourself the following questions: What is the right acre mix for my situation? Should I plant more corn acres or more soybean acres? Should I just keep doing what I've been doing??
Try not to be influenced by outside factors. Evaluate your own specific challenges and needs.
Here is an analysis tool which may help you create a better perspective. Simply plug in your cost of production, projected yield, and market price for both crops. This tool gives you a side-by-side comparison in order to help you easily manipulate your numbers as conditions change.

                                   Complete the Tan boxes
 
Plan #1
Crop
Corn
 
 
Soybeans
Income / Ac.
$980.50
 
Income / Ac.
$640.80
Expense / Ac
$855.00
 
Expense / Ac
$587.00
Revenue / Ac.
$125.50
 
Revenue / Ac.
$53.80
Margin / Ac.
14.68%
 
Margin / Ac.
9.17%
 
Corn
`
 
Soybeans
Yield
185
 
Yield
60
Price
$5.30
 
Price
$10.68
 
 
 
 
 
                                   Complete the Tan boxes
 
Plan #2
Crop
Corn
 
 
Soybeans
Income / Ac.
$1,110.00
 
Income / Ac.
$682.80
Expense / Ac
$855.00
 
Expense / Ac
$587.00
Revenue / Ac.
$255.00
 
Revenue / Ac.
$95.80
Margin / Ac.
29.82%
 
Margin / Ac.
16.32%
 
Corn
`
 
Soybeans
Yield
185
 
Yield
60
Price
$6.00
 
Price
$11.38
 
 
 
 
 

 
Tracking your opportunities instead of following a general trend will help you to make more effective decisions. Cropping decisions are definitely a moving target! Doing what's best for your operation always comes from evaluating your own numbers, not others!
If you'd like a copy of this worksheet or have any specific questions, please let me know.
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