Dakota Farmer

Wild cards include lack of stored soil moisture and the risk of unexpected price decline.

December 23, 2012

4 Min Read

Continued strong crop prices make projected returns to 2013 crop production in North Dakota very positive, despite a 5-10% increase in per-acre costs of production, according to Andy Swenson, North Dakota State University Extension Service farm management specialist.

Profits for 2013 are expected to be higher than projections made for 2012, but lower than what actually occurred in 2012. Crop prices increased unexpectedly in 2012 because drought reduced yields through much of the U.S.


"Fortunately, yields in North Dakota withstood the dry weather surprisingly well because of the abundant soil moisture at the start of the crop year," Swenson says. "The high price projections are a 'leftover' from the short U.S. crops of 2012. The risk in crop prices always is a reality in projecting revenues. Also … unlike last spring, soil moisture is depleted."

Except oats, all crops show a positive return to labor and management in all regions.

"Corn is king across most of the state, at least on paper, for 2013," Swenson says. "Returns to labor and management are projected to range from $124 per acre in the southwestern region to nearly $200 per acre in the southeastern region. However, corn in the western regions has higher production risks, and crop insurance only is available by written agreement in the northwestern and some counties of the southwestern regions."

Soybeans, malting barley and dry beans project returns to management and labor ranging from $77 to $144, depending on the region. Overall, the average is $112 per acre. Dry beans require more management than soybeans, and both dry beans and barley have a risk of significant price reductions if production does not meet quality specifications. Soybeans and dry beans are not budgeted for the western regions.

The price for confection sunflowers is lower than last year's projection, but the crop still shows a $125 to $130 return to labor and management in the south-central and the north-central regions. Other regions project less than $90 per acre.

Winter wheat shows strong returns, ranging from $66 in the northwest to $118 in the southeast, but fall soil moisture and plantings were low. Spring wheat returns to labor and management should average about $75 per acre over all regions, whereas durum and rye should average $60 per acre.

Oil sunflowers, canola and flax show returns that average about $50 per acre across the state. However, it can vary significantly by region. The highest projected returns for oil sunflowers is $75 to $80 per acre in the north-central and south-central regions, and the best return for canola is $84 per acre in the northeastern region.

The minor crops of yellow mustard, millet and safflower project very well in 2013 because of higher prices. Yellow mustard returns to labor and management should average $140 per acre and safflower and millet about $100 per acre for the regions they were budgeted. Because prices are volatile, consider contracting and inquire about act-of-God production contracts, Swenson suggests. Another consideration is that revenue protection insurance is not available, and actual production history insurance is not available for these crops in all counties.

Yellow field peas and lentils project returns to labor and management of around $50 per acre. Projections for lentils are lower than in past years.

Overall, cost of production increases are modest compared with those of 2011 and 2012.

"Fertilizer is flat to down slightly, fuel should be down from actual 2012 prices and interest rates remain low," Swenson says. "Seed prices are mixed. Corn and soybean seeds are projected to be 5-10% higher, with corn in the upper end of that range. Sunflowers and canola will have more modest increases, and seed prices for durum, barley, dry beans, lentils and chickpeas should be lower than last year."

Chemical prices are somewhat higher overall and led by 20% or so increases in glyphosate and phenoxy herbicide prices relative to one year ago. Repair and machinery ownership costs are up again, and land costs have shown a strong increase.

"A perfect apples-to-apples comparison of crops is not achieved because different levels of labor, management and risk exist among crops," Swenson says. "It is important to note that the budgets estimate returns to labor and management with no consideration of price and yield variability or risk."

The budgets are available on the Web at http://www.ag.ndsu.edu/pubs/ecguides.html and the crop compare program is available at http://www.ag.ndsu.edu/farmmanagement/tools.

Source: NDSU Extension

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