Margin Minute: Calculate The Value Of Crop Inputs

May 5, 2017 12:00 PM
 
 

Your wet fields might need another nitrogen application, and you might want to consider a seed treatment or fungicide in light of those environmental conditions. But how do you know those decisions make good financial sense? Use a spreadsheet such as the one that Iowa producer Chris Barron, a consultant with Ag View Solutions, has developed.

“There may be some things that we have to do to enhance yield on the crop-protection side of things,” Barron says. “We look at it as a way to enhance your margin. In other words, make sure we’re calculating some of those costs and making the right decisions based on the benefit that we would get from an investment.”

For example, suppose you want to use a seed treatment or extra nitrogen application that costs $11 an acre. That investment will generate a 5-bu. yield improvement. Is it worth it? Use a spreadsheet to make the call.

“What you really want to look at is down here, this cost per bushel,” Barron points out on the spreadsheet. (See the video attached to this article for complete details.) “In this example, it’s a cost per bushel of 6 cents. Once you put in your yield estimate, it’s going to give you a cost per bushel, and it’s also telling you how many bushels do you have to increase to cover the cost. In this case, it’s 3 bu. So if this is a nitrogen application in corn, you’re spending that $11, you’re certain or estimate that you’re going to be able to get 5 bu. and you need 3 bu. In this case, you’ve got a per-acre gain of about $7.75.”

Want a copy of Barron’s free spreadsheet for analyzing the economic value of crop inputs? Email him at cbarron@agviewsolutions.com or call 319-533-5703.

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