Matching Bushels & Expenses
Oct 17, 2011
One way to think about marketing is to consider how many bushels you need to cover expenses. As you analyze each individual expense it's important to have a clear understanding of the productivity required to meet each expense. With this information at your fingertips, you can determine price objectives for both expenses and income. Managing a successful farming operation in the future will depend on your ability to recognize margin opportunities immediately and be able to follow through with disciplined marketing.
Here is a tool which calculates bushels needed in order to cover your expenses.
|
Farm Name
|
Joe Farmer
|
Total Prod. $
|
$1,644,075.00
|
|
Total Acres
|
1,500
|
Expense/Ac.
|
$1,096.05
|
|
Crop
|
CORN
|
Gross $ /Ac.
|
$1,202.50
|
|
Market Price Goal
|
$6.50
|
Cost/Bu. Prod.
|
$5.92
|
|
Yield Est. / Goal
|
185
|
$ Margin Ac.
|
$106.45
|
|
Total Grain Production
|
277,500
|
ROI
|
9.7%
|
|
|
|
|
|
CROP EXPENSE LIST
|
Expense PER/AC.
|
OVERALL $
|
PER/ AC. Bu.
|
OVERALL
|
|
Return to Management
|
$150.00
|
$225,000.00
|
23.08
|
34,615
|
|
Land Payment/Rent
|
$245.00
|
$367,500.00
|
37.69
|
56,538
|
|
Taxes
|
$25.00
|
$37,500.00
|
3.85
|
5,769
|
|
Interest
|
$15.00
|
$22,500.00
|
2.31
|
3,462
|
|
Insurance
|
$25.00
|
$37,500.00
|
3.85
|
5,769
|
|
Seed
|
$102.00
|
$153,000.00
|
15.69
|
23,538
|
|
Fertilizer
|
$86.22
|
$129,330.00
|
13.26
|
19,897
|
|
Nitrogen
|
$117.62
|
$176,430.00
|
18.10
|
27,143
|
|
Herbicide
|
$28.71
|
$43,065.00
|
4.42
|
6,625
|
|
Fungicide/Insecticide
|
$37.50
|
$56,250.00
|
5.77
|
8,654
|
|
Custom Spray 2 pass
|
$15.00
|
$22,500.00
|
2.31
|
3,462
|
|
Equipment/Fuel/ Labor
|
$173.00
|
$259,500.00
|
26.62
|
39,923
|
|
Grain Hauling
|
$37.50
|
$56,250.00
|
5.77
|
8,654
|
|
Drying Expense
|
$27.50
|
$41,250.00
|
4.23
|
6,346
|
|
Storage
|
$11.00
|
$16,500.00
|
1.69
|
2,538
|
|
Tile / Irrigation
|
$0.00
|
$0.00
|
0.00
|
0
|
|
Total Expenses / Ac.
|
$1,096.05
|
$1,644,075.00
|
168.62
|
252,935
|
This type of tool helps you to clearly visualize your production requirements. As you get a handle on expenses, you will be able to structure price and yield goals designed to cover all expenses.
A final thought; notice “return to management” is the first line item expense. Be sure to pay yourself first. Determine a reasonable profit level which suits your farm and be sure to include that in your overall expenses. When you're marketing your grain part of the expenses you are covering should be PROFIT.
