Jul 24, 2014
Sign UpLogin

Seed Selection, Is It All a Big Gamble?

January 30, 2013
 
Seed
  
 
 

Author's Note:  The numbers in highlighted area below have been updated from the print version. I apologize for any confusion and want to thank our readers for their comments and feedback.

Meteorologist provides hazy ball, but it could help with seed selection

If the 2013 growing season for many farmers is a repeat of last year, it’s worth asking "Should I spend $300 on seed when I can spend $100, and collect more from insurance?" The answer, experts say, depends on location and philosophy.

"The Corn Belt, as a whole, is most likely to have better yields than 2012, but still below trend."


The Ohio River Valley area has recently received excess moisture, so farmers there don’t need to worry about a soil moisture shortage, explains Elwynn Taylor, an agricultural meteorologist at Iowa State University. On the flip side, soil moisture is still a concern in central Illinois and gets worse as you move west.

"Based on current conditions, Ohio River Valley farmers should plant what they normally plant, knowing that there’s increased risk for extreme weather as we move into the summer months," Taylor says. "Excess moisture at planting means shallow rooting and increased susceptibility to adversely high temperatures and dryness late in the growing season.

"The western part of the Corn Belt is not likely to get the soil moisture it needs by the time planting rolls around. This means if we do not have ideal precipitation and temperatures this summer, we will lose yield."

For the upcoming growing season, Taylor says the Corn Belt as a whole is most likely to have better yields than 2012, but still below trend, which is about 160 bu. per acre.

"We have no indication of what the summer will bring, but we know we can expect to see more extremes in the next 20 years than we have the last 20 years," he says. "Last year was the first of this 20-year cycle."

Production Rehearsal. If you know you’re in for a bad year, should you spend all that money on inputs, such as seed, with the hopes of a bigger insurance check? One insurance specialist says no, and the numbers don’t add up. Steven Saveraid, a senior financial services officer with AgStar, walks through an example of a typical Nebraska corn farm.

Farmer John has 2,000 acres of corn with an average production history of 160 bu. per acre. Let’s say he purchases revenue protection insurance for 80% of production, which puts the mark at 128 bu. per acre. If the average price in February for December 2013 futures is $6, this sets the price for expected revenue.

Let’s say John had a repeat of last year and his field average was 123.4 bu. per acre—a loss of 4.6 bu. per acre (below what’s insured). This should result in a total payout of $55,200. John still has 246,800 bu. to market. If he is able to sell at $6 he receives $1.48 million plus his payout for the crop. If he can capture $7, he will receive $1.72 million plus the payout.

If John’s farm took a nose dive and averaged 90 bu. per acre, he’d be looking at a $456,000 payout. With 180,000 bu. to market at $6, John would receive $1.08 million plus the payout. If he can capture $7 corn, he will receive $1.26 million plus the payout.

How does seed play into the equation? If John purchases seed at $340 per unit, his total seed cost to plant 2,000 acres is about $278,000 (planting 32,800 seeds/acre). If John purchases seed at $220 per unit, his total seed cost is $180,400. If John purchases seed at $150 per unit, his total seed cost is $123,000. This does not factor in fuel, labor, fertilizer and machinery.

Farmer John also needs to add the cost of insurance to the equation. Saveraid says many farmers aren’t aware, but there is a "good management" clause that must be taken into account. "You can’t neglect the crop," he says, noting that a serious loss will hurt your average production history.

Deciding Factors. Taylor recommends checking out an online tool to compare growing degree days, precipitation and stress degree days of different years. "Look at 2004, which was a great year, and look at 1988, which was a bad year," he says. "Then look at where we are today to help you with your decisions."

If you expect hot and dry conditions in your area, give consideration to planting fewer plants per acre (but not below advised levels), Taylor says. If you expect moist and cooler conditions, you might want to put your plant population at the higher end of the recommended range.

The online tool Elwynn Taylor refers to is available at www.TopProducer-Online.com/Weather.

p36 Is it All a Big Gamble Chart

 

See Comments

FEATURED IN: Top Producer - February 2013

 
Log In or Sign Up to comment

COMMENTS (5 Comments)

Julie Douglas - Mexico, MO
You are correct. I should have realized those numbers were too high. I was using 2.5 units or bags/acre in the calculation. I have revised the numbers above (based on information from the University of Nebraska-Lincoln) to reflect a planting population of 32,800 seeds/acre.
11:12 AM Feb 4th
 
swmnag - Marshall, MN
Julie, the point was not who gave you the numbers. The point was you should have been able to see that your numbers make absolutely no sense and because I am a nice guy, I will point out to you that you just did your math backwards. You assumed 2.5 A per unit, but you multiplied it instead of dividing it. It should be $340/2.5 = $136/A * $2000 = $272,000; not, 340*2.5 = 850 *2000= $1,700,000.
8:28 AM Jan 31st
 
swmnag - Marshall, MN
Again Julie, there isn't anyone in this country that pays $850/A in seed cost for corn. My point to the comment was, don't just quote what someone tells you. You need to be able to take what someone says and see if it makes sense. In the example, someone is saying $340/unit (which I believe is a bag of seed) and you can get about 2.4 acres out of a unit (depending on planting popupalation). This works out to $141.66/A of seed costs, which would be an acceptable cost, and not the $850/A number quoted in the article. You did the math backwards.
8:21 AM Jan 31st
 
Julie Douglas - Mexico, MO
Hello: Thank you for your comments. The above seed numbers do not come from Ag Star, but rather a company that deals seed in Nebraska. The price points given do not take into account any cashback benefits or discounts for purchasing a certain amount of seed, but they were the price points quoted when I called in early January.
11:59 AM Jan 30th
 
swmnag - Marshall, MN
Julie, as the Top Producer Managing Editor, maybe you should take a look at the numbers you just posted for seed cost. $1.7 million for seed on 2000 acre farm. Come on. Read what you wrote. I had to look 3 times to make sure I read it correctly. That is $850/A. Either you got terrible numbers from Ag Star, and don't know enough to look at the information, or you serverly lack "editorial" ability. I picked this up right away. Maybe this is why you guys always seem to pick the "Top Producers" that fall on their face.
9:02 AM Jan 30th
 



Name:

Comments:

Hot Links & Cool Tools

    •  
    •  
    •  
    •  
    •  
    •  

facebook twitter youtube View More>>
 
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions