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Check revenue vs. seed cost when picking corn hybrids

Check revenue vs. seed cost when picking corn hybrids
Crop watch 2015: Highest yielding corn hybrid may not net most income after accounting for seed costs.

There's a field in the Eastern Corn Belt that probably was the most watched corn field all year. It's part of Crop Watch, a Farm Progress effort, co-sponsored by Seed Consultants, Inc., Washington Courthouse, Ohio.

Crop Watch 11/6: Corn is in the bin, now it's time to think farm safety

Earlier we reported that the field yielded 194.1 bushels dry corn. It's located in an area which received too much rain, but in this case, the heaviest rain came in late June and July when the crop was established.

Crop watch 2015: Highest yielding corn hybrid may not net most income after accounting for seed costs.

The farmer put seed of Hybrid A in 12 boxes, and Hybrid B in the other 12. So he had blocks of 24 rows of each hybrid across an 80-acre field.  Hybrid A yielded 193 and B yielded 195.2 bushels per acre

There are two key lessons here related to the two hybrids. First, yields of the two hybrids are so close they're virtually equal. It wasn't a replicated trial, but if it was, there's a strong probability there would have been no significant difference between hybrids.

Bob Nielsen, Purdue University Extension corn specialist, says experimental error and such differences as variations in soil type and micro-climate can account for differences that small. Pair the two again next time and yields might be reversed.

Economics lesson
For sake of argument, assume differences were real. Hybrid B yielded 2.2 bushels more per acre. Hybrid A was one percentage point wetter. With corn at $3.75 per bushel, using a 1.4% shrink and 1.25 cent per half-point moisture deduction, here is the difference in revenue. The moisture charges are used by a large Midwest elevator.  Assume hybrid B had no dock at 15%, and hybrid A was 16%.

Compare more than bushels: The yield monitor or grain cart scales doesn't tell the whole story. Factor in seed costs before deciding which hybrid nets more profit.

Revenue, hybrid A: 193 x $3.75/bushel = $723.75; Moisture deduction, shrink 193 x 1.4%=2.7 bushels. Payment is reduced by 2.7 x $3.75= $723.75-$10.13= $713.62. Further dock: 1.25 cents x two half-points= 2.5 cents dock per bushel.; 193 x 2.5 cents = $713.62- $4.82= $708.80 per acre

Revenue, hybrid B: 195.2 x $3.75 bushel = $732 per acre.

Revenue difference: $732 for B -$708.80 for A = $23.20 per acre advantage in gross revenue

Crop Watch 11/2: Cool temperatures at pollination lost in the fanfare of a wet season

The story isn't over! List price for Hybrid A is $220 per 80,000 kernels. List price for B is $300. Average seeding rate is 32,000 seeds per acre.

Seed cost per acre, hybrid A: 80,000 seeds/.unit divided by 32,000= 2.5 acres, $220 divided by 2.5 = $88 per acre

Seed cost per acre, hybrid B: $300 divided by 2.5= $120 per acre

Gross revenue minus seed cost, hybrid A: $708.80-$88=$620.80 per acre

Gross revenue minus seed cost, hybrid B: $732- $120= $612 per acre

Here's the bottom line. The two hybrids are dead even on yield statistically. If the differences were real, Hybrid B grosses $23.20 more per acre in revenue. After seed cost, hybrid A nets $8.80 per acre more.

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