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A tale of 2 farms

scenic ripened soybean plants
PATHWAY TO PROFIT: To be profitable in a tight margin era, a farmer must know the total cost of inputs.
Field Fodder: When it comes to growing crops, profit trumps yield every time.

By Richard Halopka

Every fall after harvest, conversations can be heard in coffee shops around the county about crop yields. This is a true story of two very successful farmers. They have similar management programs, but there is one large difference: One is a true no-till guy, while the other is a conventional-tillage guy.

Yield advantage
The two farmers meet in a coffee shop, and the conversation begins with their soybean yields from this past growing season. The result is Till Farmer has a 10-bushel-per-acre advantage over No-till Farmer. Till Farmer remarks to No-till Farmer, “I told you that no-till doesn’t work.” The story could end here, but we need to gather some facts.

Remember, No-till Farmer is a true no-tiller, making one pass in the spring to plant his crop. Till Farmer brags that he prefers clean tillage, following corn with moldboard plowing, then a pass with a disk, followed by a harrow, mulching and then planting, plus rolling the field after planting. So, Till Farmer has five additional passes compared to No-till Farmer. At $15 per pass, this would amount to a $75-per-acre increase in costs compared to No-till Farmer.

Seeding rate is next in the conversation. No-till Farmer says he plants treated seed at 140,000 seeds per acre. While Till Farmer also uses treated seed, he wants a thicker stand and plants 180,000 seeds per acre. The increase in seeding rate results in a $17-per-acre additional cost.

Both farmers agree on weed control and use similar programs. No-till Farmer says he uses integrated pest management and scouts his fields each week during the season. He uses additional pesticides when necessary. This year, No-till Farmer was fortunate and didn’t need to apply additional pesticides.

Till Farmer says he doesn’t really scout his fields but wants to “protect” his yield. So, he applies a micronutrient pack when spraying herbicide, because it only costs an additional $3 per acre. This past year, he heard about the white mold issue in soybeans and wanted to protect his yield from that, so he sprayed a fungicide and figured that as long as he was going across the field, he might as well add an insecticide, because it also only cost $3 per acre (micronutrient, fungicide and insecticide plus application equals $33 per acre). Till Farmer spent an additional $33 per acre on inputs compared to No-till Farmer.

Now they discuss selling the crop. Both farmers locked in a $9-per-bushel price on their soybeans.  We must add up the cost per acre and income per acre to determine profit per acre.

Till Farmer has an additional $90 of gross income per acre when compared to No-till Farmer; however, Till Farmer has additional input costs: $17 for seed, $75 for tillage and $33 for additional pesticide. The total of his additional inputs equals $125 per acre. Subtract $125 from $90. This equals negative $35 per acre when compared to No-till Farmer, even though Till Farmer had a 10-bushel yield advantage.

No contest
No-till Farmer lost the yield contest that day in the coffee shop, and he congratulated Till Farmer on his yield advantage as he walked out the door — smiling on his way to the bank to deposit his soybean check.

We need to know the rest of the story, and profit per acre will win over yield per acre any day. 

The bottom line is that to be profitable in a tight margin era, a farmer must know the total cost of inputs. Yield alone doesn’t guarantee profit. As a farmer, you must develop a budget with all your inputs, reasonable yields and a projected selling price, and determine if you can make a profit. Profit per acre will win against any yield contest.

For help wading through managing crops in tough times, call your county Extension office, or email [email protected].

Halopka is a certified crop adviser and the Extension crops and soils agent in Clark County, Wis.

TAGS: Management
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