April 4, 2023
For those of us who enjoy numbers, the first couple of months of a new year are always a lot of fun. From the last year’s production statistics to the current year’s crop insurance price discovery period to the long-range projections published by USDA, there are ample opportunities to bury oneself in data at this time of year.
But one set of numbers takes the cake (for me at least): crop budgets. All the other data sets are fun to analyze, but if sorghum isn’t competitive in crop budgeting, nothing else done at National Sorghum Producers, the Sorghum Checkoff or in my own consulting business, Sero Ag Strategies, will make much difference. Fortunately, this year, sorghum is very competitive.
I’ll start by saying individual experience may vary. From capital structures to productivity, every farm is different, and what works for one farmer might not work for another. However, overall, sorghum looks to be one of the strongest options for 2023.
In Kansas, for example, compared to dryland corn, cotton, soybeans and wheat, sorghum is a more profitable option in every area of the state except the southwestern portion. The budgets from which this conclusion was drawn, created by Kansas State University, use the most common crop rotations in each area, and in southwest Kansas, wheat-cotton-fallow eclipsed wheat-sorghum-fallow.
However, in lighter soils, such a substitution will be less common than in heavy soils. So, even if sorghum isn’t the most profitable option overall, it still is in certain circumstances. The same is also true outside of Kansas, where sorghum was also the best option overall in many cases.
What’s driving this year’s differences in profitability? As usual, cost is a significant factor.
Seed and herbicide costs are particularly lower for sorghum. Even in cases where herbicide costs have begun to creep upward, seed costs are so much lower that sorghum is one of the lowest-cost options on the farm based on those savings alone.
In addition to these cost advantages, sorghum is projected to be priced competitively compared to corn this year. The ongoing drought has depleted stocks of all feed grains in the central U.S., so end users will pay a premium for locally produced grains, including — and especially — sorghum. Between these premiums and the cost savings, it isn’t hard to see why sorghum looks so good in this year’s crop budgeting exercise.
What should farmers do with these savings (other than paying down debt, which is always a good option in times such as these)? I think, from an agronomic perspective, investing in fertility makes a lot of sense.
Notice I didn’t include lower fertilizer costs as a driver of higher profitability for sorghum. That’s because ample fertilizer is an essential element of strong crop productivity. Anyone working to build lean muscle wouldn’t cut protein from their diet. Similarly, it wouldn’t make much sense to cut fertilizer when trying to produce a large crop. Belt-tightening may be important for the foreseeable future, but farmers should be wary of finding too many savings in this vital area.
As always, National Sorghum Producers and the sorghum checkoff stand ready to help farmers talk through any scenario — from crop budgeting scenarios to agronomic scenarios. Visit sorghumgrowers.com or sorghumcheckoff.com to connect or learn more.
Duff is founder of Sero Ag Strategies and serves as a consultant to National Sorghum Producers. He can be reached by email at [email protected] or on Twitter @sorghumduff.
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