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Glennis McClureNebraska Extension Educator
1
Where Do Land Costs Fit Into Enterprise Budgets?
Presented by: Glennis McClure, UNL Ag Economics –
Farm & Ranch Management Analyst
OBJECTIVES
1) Land cost and its affect on cost of production.
2) Considering cost of production; rental rates and land management decisions.
Glennis McClureNebraska Extension Educator
2
UNL Custom Rates Report https://agecon.unl.edu/custom-rates
UNL LIVESTOCK BUDGETS https://agecon.unl.edu/publications/budgets
UNL CROP BUDGETS https://cropwatch.unl.edu/budgets
82 crop budgets representing 15 crops for 2020
Modify the budgets using Excel to make them
work for you
Nebraska Crop Budgets
Glennis McClureNebraska Extension Educator
3
Use in marketing and management
decisions
Determine production practices
and inputs used
Compare profitability of various
enterprises
Know Your Cost of Production
2020 Soybean Budgets (10) Yield Est.
Cash Cost
/bu
Economic
Cost /bu
Budget # Dryland
57 Dryland Conv Till 45 $5.54 $8.32
58 Dryland No-till 45 $5.38 $7.73
59 Dryland No-till 45 $5.41 $7.98
Dryland Average 45 $5.44 $8.01
Budget # Irrigated
60 Pivot Irr- Conv Till 67 $5.59 $9.01
61 Grav Irr - Ridge Till 70 $4.88 $7.93
62 Pivot Irr - No-till 75 $4.88 $7.74
63 Pivot Irr - No-till 64 $5.21 $8.55
64 Pivot Irr - No-till drilled 78 $4.45 $7.18
65 Pivot Irr - No-till drilled 78 $4.47 $7.20
66 Pivot Irr - No-till drilled 78 $4.48 $7.21
Irrigated Average 73 $4.85 $7.83
Glennis McClureNebraska Extension Educator
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Corn Budgets - Dryland Yield Est. Cash Cost /bu
Economic
Cost /bu
Budget # Dryland
15 Dryland Conv Till 100 $3.36 $4.74
16 Dryland Conv Till 110 $2.77 $3.96
17 Dryland Conv Till 160 $2.45 $3.80
18 Dryland Conv Till 170 $2.15 $3.39
19 Dryland No Till 135 $2.49 $3.39
20 Dryland No Till 180 $2.21 $3.34
21 Dryland No Till 140 $2.51 $3.37
22 Dryland No Till 185 $2.24 $3.34
23 Dryland No Till 145 $2.19 $3.04
24 Dryland No Till 195 $1.96 $3.01
25 Dryland Ecofallow 130 $2.33 $2.95
Dryland Corn Average 150 $2.42 $3.48
Corn Budgets - Irrigated Yield Est. Cash Cost /bu
Economic
Cost /bu
Budget # Irrigated
26 Irrigated Ridge Till 245 $2.26 $3.22
27 Irrigated Ridge Till 255 $2.08 $2.98
28 Irrigated Ridge Till 250 $2.29 $3.24
29 Irrigated Conv Till 195 $2.69 $3.37
30 Irrigated No Till 245 $2.22 $3.14
31 Irrigated No Till 250 $2.23 $3.12
32 Irrigated No Till 275 $2.02 $2.84
33 Irrigated No Till 275 $2.08 $2.90
34 Irrigated No Till 275 $2.09 $2.91
35 Irrigated Conv Till 235 $2.54 $3.59
36 Irrigated Conv Till 245 $2.33 $3.30
37 Irrigated Conv Till 195 $2.84 $3.55
38 Irrigated Conv Till 205 $2.61 $3.26
39 Irrigated Conv Till 240 $2.55 $3.57
Irrigated Corn Average 242 $2.35 $3.21
Glennis McClureNebraska Extension Educator
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Editing the currentUNL Crop Budgets
https://cropwatch.unl.edu/budgets
What’s in a Crop Budget?
• Budget #24 Dryland Corn – Eastern Nebraska
No Till, After Beans, 195 bushel yield
Compare to –
• Budget #39 Irrigated Corn – Statewide Pivot Land Value
Continuous corn, 240 bushel yield
Glennis McClureNebraska Extension Educator
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Change Land Costs in the Budgets
Want to adjust the land value?
• Go to the General Variables tab
• Corn budget #24 is Dryland Eastern land value at $5,765
• Change that line to the value you want.
********************************************************************************
If cash rent scenario, then 0 out the land value.
Unhide lines in the materials and services area, note cash rent and enter that amount into the total.
Cash rent is a cash cost so you want to get it in with cash expenses.
Cost of Production and Rental Arrangements?
•Affects cost of production for operator
•Landlord receives fixed revenue for the period
•Rule of Thumb?
Fixed Cash Rent –set amount per
acre for the year
•Actual rent depends on yield and price
•Risks are shared
•Some cost of production considered
Flexible Cash Lease
Glennis McClureNebraska Extension Educator
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Cost of Production and Rental Arrangements?
• Landlord receives share of crop + USDA payments
• Typical 50/50
• Owners share in inputs, drying, storing and marketing
Crop-share Lease
• Operator supplies labor and equipment to till, plant, fertilize, control pest, harvest and hauling
• Operator receives a fixed payment for operations
• Landowner pays all other expenses
• Landowner owns the crop, USDA payments and markets it
Custom Farming Contract
Glennis McClureNebraska Extension Educator
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Ag Budget Calculator Phase 1
Enter Field Operation
Power UnitImplementMaterials & Services
15
1st Field Operation
Spray Burndown
Herbicide
Field Sprayer
JD Tractor
2nd Field Operation
Plant Bulk Soybeans
12 row planter
Big Red tractor
3rd Field Operation
Post Spray Herbicide
Custom Hire
Glennis McClureNebraska Extension Educator
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Phase 1 Report: Similar to Current Budgets Part 1 & 2
Yet Customize for YOU!
Glennis McClureNebraska Extension Educator
10
Phase 1 Report: Similar to Current Budgets Part 1 & 2
Yet Customized for YOU!
Glennis McClureNebraska Extension Educator
11
Beyond Phase 1 of the Program
• Add projected enterprise revenue
• Allocate general farm expenses
• Generate cash and economic enterprise reports, breakeven, and sensitivity analysis
• Create a cash flow report
Money doesn’t buy happiness
But it can buy a combine
Have you ever seen a sad person driving a combine?
Glennis McClureNebraska Extension Educator
12
Nebraska Strong Financial Services“Nebraska Strong Financial Services helps improve financial decision-making, promoting survival of farm and ranch operations in Nebraska”
Services Whole Farm Analysis Enterprise Analysis Cash Flow Projections Long Range Budgeting Benchmarking across
All major cost items, like seed and fertilizer
Marketing Yields
Benefits Improvement in accuracy of farm/ranch financial performance Comparison with similar operations to identify areas for
improvement Evaluation of alternative business scenarios before making the
investment decision Discuss identified areas of possible improvement with relevant
U of Nebraska Extension/Faculty
Department of Agricultural Economics
Contact:
Pedro MasiFinancial AnalystDept of Ag. EconomicsPh: [email protected]
Cory WaltersAssociate ProfessorDept of Ag. EconomicsPh: [email protected]
IT IS IMPORTANT THAT WE LEARN TO MANAGE OUR STRESS LEVELS
AND RECOGNIZE HIGH STRESS LEVELS IN OTHERS
NEBRASKA RURAL RESPONSE HOTLINE: 1-800-464-0258
NATIONAL SUICIDE PREVENTION LIFELINE: 1-800-273-TALK (8255)
AGRICULTURE IS A STRESSFUL OCCUPATION
Glennis McClureNebraska Extension Educator
13
Glennis McClure
UNL Ag Economics
402.472.0661
Dryland
Unit Power Imp. Power Imp.1 Spray Spring Burndown Herbicide 1 0.95 0.21 0.29 0.60 0.90 1.08 4.032 Spray Fertilizer 1 0.95 0.21 0.29 0.16 0.90 2.71 5.223 Plant No-Till 1 3.00 0.88 0.95 3.26 2.96 4.53 15.584 Spray Herbicide 1 0.95 0.21 0.29 0.60 0.90 1.08 4.035 Spray Herbicide 0.5 0.47 0.10 0.14 0.30 0.45 0.54 2.006 Spray Insecticide Custom7 Combine Dryland Corn 1 3.44 3.43 7.56 1.20 8.08 4.63 28.348 Cart 195 bu 3.48 0.99 1.20 1.78 3.75 1.05 12.259 Truck Custom10 Dry Grain Custom
Total for Field Operations 13.24 6.03 10.72 7.90 17.94 15.62 71.45
Materials & Services Rate Unit Total Glyphosate 5# w/Surfactant 1 50% 32 ounce 0.12 1.882,4-D Ester LV4 1 50% 1.0 pint 2.00 1.0021-0-0-24S 1 50% 1.7 pound 0.35 0.3032-0-0 2 100% 130 lbs N 0.40 52.00Corn Bt, ECB, & RIB 3 100% 27.1 k seed 3.13 84.6910-34-0 3 100% 6 gallon 2.45 14.70Acuron 4 100% 2.5 quart 17.50 43.75Crop Oil Concentrate 4 100% 1.6 pint 1.25 2.0021-0-0-24S 4 100% 2.5 pound 0.35 0.88Armezon Pro 5 50% 14 ounce 1.33 9.30Atrazine 90 DF 5 50% 0.5 pound 3.00 0.75Crop Oil Concentrate 5 50% 1 pint 1.25 0.63UAN 5 50% 3 pint 0.19 0.28
* Spray 6 30% 1 acre 7.00 2.10* Brigade 2EC 6 10% 5.12 ounce 0.98 0.50* Mustang Maxx 6 10% 2 ounce 1.41 0.28
Haul Grain Bushels 9 20% 195 bushel 0.11 4.29Dry 2 Points Removed 10 30% 195 bushel 0.08 4.68Scouting Dryland Corn 100% 1 acre 7.00 7.00
7.00 7.00
Total Materials & Services 238.01*Insecticide for Spider mites and Western Bean Cutworm respectively.Total listed costs for Field Operations and Materials and Services 309.46
Interest on Operations Capital 275.90$ 5.50% for 6.0 mo. 7.59Total Operating and Use Related Ownership Costs 317.05
Overhead (accounting, liability insurance, vehicle cost, office expense) 20.00Real Estate Opportunity^ 5,765$ 3.00% 172.95Real Estate Taxes 5,765$ 1.35% 77.83Total Cost per Acre Including Overhead 587.83
Cash Cost per bushel ^Ownership and RE Opportunity not included in cash costs. 1.96Cost of production per bushel 3.01
cash expense @
Dryland (Eastern) per acre @per acre @
Crop InsuranceScouting
AdditiveAdditiveHerbicideHerbicideAdditiveAdditiveCustom
InsecticideInsecticide
CustomCustom
Herbicide
Operation Index
Percent Acres
Applied
Application Applied Price
HerbicideAdditiveFertilizer
SeedFertilizer
Herbicide
Your Estimate
Repairs Ownership^
TotalYour
Estimate
2020 Budget 24-Corn, Bt, ECB, & RIB, Eastern Nebraska, No Till, after Beans, 195 bushel Yield
Field OperationsTimes or Qty
Labor @ $25.00 /Hr
Fuel @ $2.27 and Lube
Pivot Irrigated Diesel, 800 GPM 35 PSI, 13 acre/inches
Unit Power Imp. Power Imp.1 Disk 1 2.52 1.98 0.60 1.36 5.40 1.22 13.082 Field Cultivation 1 1.83 1.43 0.63 1.43 1.97 1.62 8.913 Spray Herbicide 1 0.95 0.21 0.29 0.60 0.90 1.08 4.034 Plant 1 3.00 0.71 0.95 2.91 2.96 4.05 14.585 Row Crop Cultivation 1 2.50 0.83 0.86 0.44 2.69 1.52 8.846 Row Crop Cultivation 0.25 0.63 0.21 0.22 0.11 0.67 0.38 2.227 Spray Insecticide Custom8 Spray Custom9 Spray Herbicide Custom10 Pivot E 125' Lift w/fertigation 13 ai 15.05 37.06 3.80 23.38 6.66 12.83 98.7811 Combine Irr Corn 1 4.23 4.22 9.31 1.94 9.95 4.63 34.2812 Cart 240 bu 4.29 1.22 1.48 2.20 4.61 1.29 15.0913 Truck Custom14 Dry Grain Custom
Total for Field Operations 35.00 47.87 18.14 34.37 35.81 28.62 199.81
Materials & Services Rate Unit Total Balance Flexx 3 100% 4 ounce 5.00 20.00Bicep II Magnum 3 100% 2.1 quart 13.75 28.88Corn SmartStax RIB Complete 4 100% 33.3 k seed 3.63 120.7110-34-0 4 100% 6 gallon 2.45 14.70Spray 9 100% 1 acre 7.00 7.00DiFlexx DUO 9 100% 32 ounce 0.82 26.2532-0-0 (Applied by R2) 10 100% 215 lbs N 0.40 86.00Spray 7 10% 1 acre 7.00 0.70Brigade 2EC 7 10% 5.12 ounce 0.98 0.50Spray 8 20% 1 acre 7.00 1.40Headline AMP 8 20% 10 ounce 2.58 5.16Haul Grain Bushels 13 100% 240 bushel 0.11 26.40Dry 2 Points Removed 14 20% 240 bushel 0.08 3.84Scouting Irrigated Corn 100% 1 acre 12.00 12.00
9.00 9.00
Total Materials & Services 31,200 seeds per acre, 80,000 per bag, 5% Refuge 362.54
Total listed costs for Field Operations and Materials and Services 562.35Interest on Operations Capital 497.92$ 5.50% for 6.0 mo. 13.69
Total Operating and Use Related Ownership Costs 576.04Overhead (accounting, liability insurance, vehicle cost, office expense)Overhead (accounting, liability insurance, vehicle cost, office expense) 20.00Real Estate Opportunity^ 5,970$ 3.00% 179.10Real Estate Taxes 5,970$ 1.35% 80.60Total Cost per Acre Including Overhead 855.74
Cash Cost per bushel ^Ownership and RE Opportunity not included in cash costs. 2.55Cost of production per bushel 3.57
FungicideCustom
ScoutingCustom
HerbicideHerbicide
SeedFertilizer
FertilizerHerbicide
CustomInsecticide
Custom
Herbicide
per acre @
Crop Insurance
cash expense @
Pivot (State) per acre @
Operation Index
Percent Acres
Applied
Application
2020 Budget 39-Corn, SmartStax RIB Complete, Conventional Tillage, Continuous, 240 bushel Yield
Applied Price
Your Estimate
Field OperationsTimes or Qty
Labor @ $25.00 /Hr
Fuel @ $2.27 and Lube
Repairs
TotalYour
Estimate
Ownership^