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No till dryland_econ_comparison_22013

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Comparison of dryland crop budgets for Nebraska Panhandle and the value of information, from the University of Nebraska-Lincoln Extension.

Comparison of dryland crop budgets for Nebraska Panhandle and the value of information, from the University of Nebraska-Lincoln Extension.

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  • 1. DRYLAND BUDGET COMPARISON& VALUE OF IRRIGATIONJessica Johnson – Asst. Extension Educator, Agricultural EconomicsUpdated: 2/21/2013
  • 2. Dryland Budget Comparison
  • 3. Budget CalculationDeveloped from:2013 Nebraska Crop BudgetsRobert Klein, Western Nebraska Crop SpecialistRoger Wilson, Farm Management/Enterprise Budget AnalystIncluding: Land, Depreciation, Interest, Taxes, Overhead
  • 4. Crop Budgets Reviewed by: Mark Watson, Dryland Producer Gary Hergert, UNL Nutrient Management & SoilQuality Specialist Robert Wilson, UNL Weeds Specialist Gene Kizzire, UNL Research Technician (Farm Manager) Jim Schild, UNL Extension Educator
  • 5. Factors Influencing Budgets
  • 6. Prices↓ Fertilizer↑or = Seed↑or = Herbicide↑or = Fungicide↑ Real Estate↑ Crop Insurance Premiums“Electrical Connect Fees” were changed to “Electricity Fixed”
  • 7. Land Values050010001500200025002012$/AcreDryland Cropland (No Irrigation Potential) Northwest Dryland Cropland (Irrigation Potential) NorthwestCenter Pivot Irrigated Cropland Northwest
  • 8. Land ValuesNebraska Farm Real Estate Market Highlights, 2011-2012
  • 9. Type of Land – Average ValueNorthwest North2011/20122011/2012% Change2011/20122011/2012% ChangeDryland Cropland - No IrrigationPotential545/660 21% 800/1050 31%Dryland Cropland - IrrigationPotential550/680 24% 1200/1625 35%Grazing Land - Tillable 340/410 21% 740/880 19%Grazing Land - NonTillable 280/330 18% 390/450 15%Hayland 550/620 13% 785/950 21%Gravity Irrigated Cropland 1980/2440 23% 2050/2625 28%Gravity Irrigated Cropland 1975/2535 28% 2955/3970 34%All Land Average 635/520 22% 706/875 24%2011-2012 Values and Recent Trends by Land Class
  • 10. Factors Driving Land Value• Availability of Money – profits from farming• Low interest rates• Lack of land for sale• Returns on land are still favorable
  • 11. Insurance RatesBudget CountyCoverage Option, ProducerPremium Amount $/Acre12-Corn Cheyenne 70% Revenue Protection $16.7013-Wheat Kimball 70% Group Risk IncomeProtection- Harvest RevenueOption$8.0014-Wheat Kimball15-Peas N/A N/A16-Millet Cheyenne 70% APH 90 $13.8917-Sunflowers Kimball 70% Revenue Protection $27.02
  • 12. Budget Estimates
  • 13. Dryland Corn, WheatCorn, No-till55bu. YieldBudget #12Wheat, No-Till Fallow55bu. YieldBudget # 13Wheat CleanTill Fallow45bu. YieldBudget # 14Field Operations $59.85 $66.31 $79.61Materials &Services$149.72 $121.15 $90.72Interest onCapital &Overhead$57.55 $56.97 $56.44Cost Per Acre $267.12 $244.43 $226.77Cost per bu. $4.86 $4.44 $5.04
  • 14. Dryland Peas, Millet, SunflowerPeas35bu. YieldBudget #15Millet22cwt. YieldBudget # 16Sunflower11cwt. YieldBudget # 17Field Operations $44.13 $64.71 $59.09Materials &Services$78.92 $68.30 $134.83Interest onCapital &Overhead$55.59 $55.60 $57.12Cost Per Acre $178.64 $188.64 $251.04Cost per unit $5.10 $8.57 $22.82
  • 15. Dryland Comparison3 YearAvg. PriceTotal CashReceiptsCost ofProductionRevenueper acreMillet $9.52cwt. $209.44 $188.64 $20.80Corn $5.25bu. $288.75 $267.12 $21.63Wheat Clean TillFallow $5.58bu. $251.10 $226.77 $24.33Wheat No-TillFallow $5.58bu. $306.90 $244.43 $62.47Sunflower $29.07cwt. $319.77 $251.04 $68.73Peas – Whole $14.53cwt. $305.13 $178.64 $126.49(1) Production Costs - J. Johnson 2012 No-Till Budget Packet (2) USDA NASS Quickstats Nebraska Price Received 2010-2012 Measured in $/cwt. (3) USDA NASSQuickstats for Idaho, Montana, North Dakota, Washington Dry Edible Peas - Price Received 2010-2012 Measured in $/cwt.Assume 60lbs./bu. of Peas, 1 cwt. of Peas = 1.67 bu.(3) $14.53/cwt. ÷ 1.67=$8.70/bu.Assume 50lbs/bu. of Millet, 1 cwt. of millet = 2 bu.(4) $9.52/bu. X 2 = $19.04/cwt.
  • 16. Value of Irrigation
  • 17. Value vs. Cost of Irrigation… the cost of water as an input forproduction is the cost required to pumpand distribute water…value of the water can be attributed tothe difference in irrigation revenue vs.dryland revenue.Source: A.Giri & B.Johnson “The Value of Irrigation in a Drought Regime: The Case of 2012” Cornhusker Economics 9/19/2012
  • 18. Value IrrigationIrrigation value is dependent on thecommodity for which the irrigation isused. The more valuable thecommodity or the greater thedifference between irrigated and non-irrigated revenue, the more valuablethe irrigation.
  • 19. Value IrrigationJust as the value of a field cropchanges as supply and demandchange, so does the value ofirrigation water.
  • 20. Calculation Yield Price Production Cost Irrigation NeedWithout DroughtIrrigated Non-IrrigatedWith DroughtNon-Irrigated Irrigated
  • 21. -Irrigated RevenueNon Irrigated Revenue$ Attributed to IrrigationXIrrigated YieldPrice-Total Cash ReceiptsIrrigated Production CostsIrrigated RevenueXNon- Irrigated YieldPrice-Total Cash ReceiptsNon- Irrigated ProductionCostsNon-Irrigated Revenue1234÷$ Attributed to IrrigationIrrigation Needed$/in of IrrigationX$ Attributed to IrrigationAcres of Production$/in of Irrigation
  • 22. Quantifying DroughtDrought originates from a deficiency of precipitation over anextended period of time--usually a season or more--resultingin a water shortage for some activity, group, or environmentalsector.– National Drought Mitigation CenterDrought Monitorannual % of drought >average annual % of drought2000-2011for the U.S. and NebraskaDrought Years:2002, 2003, 2004, 2006
  • 23. Quantifying DroughtDrought originates from a deficiency of precipitation over anextended period of time--usually a season or more--resultingin a water shortage for some activity, group, or environmentalsector.– National Drought Mitigation CenterDrought Monitorannual % of drought >average annual % of drought2000-2011for the U.S. and NebraskaDrought Years:2002, 2003, 2004, 2006
  • 24. 2012 Value ofCorn IrrigationWithout Drought With DroughtIrrigated Non-Irrigated Irrigated Non-IrrigatedYield bu. 1 160 57 154 32Price bu. 2 $5.25 $5.25 $7.05 $7.05Total Cash Receipts $/acre $840.00 $299.25 $1,085.70 $225.60Production Costs $/acre 3 $625.60 $296.97 $602.14 $166.72Revenue $/acre $214.40 $2.28 $483.56 $58.88Attributed toIrrigation$/acre$212.12 $424.68Inches of WaterRequired, ET4 27.25 27.25Average Inches ofRain11.63 7.81Irrigation Needed 15.62 19.44$/inch of irrigation $13.58 $21.85Sources: B. Johnson & A. Giri Cornhusker Economics ‘Value of Irrigation in a Drought Regime: the case of 2012”Data: (1) Irrigated and Non-Irrigated Yields & Acreage, USDA NASS QUICK STATS (2) 3 year average Monthly Panhandle Crop Report 12/12, USDA NASS QUICKSTAT Price receivedMeasured in $/bu. (3) Production Costs - J. Johnson 2012 No-Till Budget Packet - 1. Corn, Strip Tillage Continuous 12. Corn, No Till Dryland (4) D. Yonts, "Crop Water Use in WesternNebraska" NEBGUIDE G1465$/inch of Irrigation
  • 25. 2012 Value ofCorn IrrigationWithout Drought With DroughtIrrigated Non-Irrigated Irrigated Non-IrrigatedYield bu. 1 160 57 154 32Price bu. 2 $5.25 $5.25 $7.05 $7.05Total Cash Receipts $/acre $840.00 $299.25 $1,085.70 $225.60Production Costs $/acre 3 $625.60 $296.97 $602.14 $166.72Revenue $/acre $214.40 $2.28 $483.56 $58.88Attributed toIrrigation$/acre$212.12 $424.68# of acres inPanhandle District69,330 69,330Value of Irrigationin the NebraskaPanhandle$14,706,279.60 $29,443,064.40Sources: B. Johnson & A. Giri Cornhusker Economics ‘Value of Irrigation in a Drought Regime: the case of 2012”Data: (1) Irrigated and Non-Irrigated Yields & Acreage, USDA NASS QUICK STATS (2) 3 year average Monthly Panhandle Crop Report 12/12, USDA NASS QUICKSTAT Price receivedMeasured in $/bu. (3) Production Costs - J. Johnson 2012 No-Till Budget Packet - 1. Corn, Strip Tillage Continuous 12. Corn, No Till Dryland (4) D. Yonts, "Crop Water Use in WesternNebraska" NEBGUIDE G1465$/inch of Irrigation
  • 26. Assumptions Assume that without irrigation, production of DryBeans and Sugarbeets would not exist. Thus theIrrigation Revenue = $/acre Attributed to Irrigation. Total number of acres would not change
  • 27. $/inch of IrrigationCommodityWithoutDroughtWith DroughtWheat $4.21 $10.17Corn $13.58 $26.24Sugarbeets $51.45 $38.09Great NorthernBeans$42.03 $38.86Pinto Beans $42.97 $57.93
  • 28. 3A: $/inch of IrrigationCommodityWithoutDroughtWith DroughtWheat $4.21 $10.17Corn $13.58 $26.24Sugarbeets $51.45 $38.09Great NorthernBeans$42.03 $38.86Pinto Beans $42.97 $57.93
  • 29. Commodity Without Drought With DroughtGreat Northern Beans $10,126,020.02 $19,504,398.25Pinto Beans $9,929,522.96 $27,880,265.00Corn $14,706,279.60 $29,443,064.40Wheat $10,337,918.91 $44,809,410.00Sugarbeets $59,890,850.54 $53,712,042.76Total $104,990,592.03 $175,349,180.41
  • 30. Thank You!Jessica Jo JohnsonAgricultural Economics – Asst. Extension EducatorPhone: 308-632-1247Email: jjohnson@unl.eduTwitter: PanhandleAgEconWebsite: http://panhandle.unl.edu/panhandle_ag_econExtension is a Division of the Institute of Agriculture and Natural Resources at the University of Nebraska-Lincoln cooperating with the Counties and the U.S. Department of Agriculture.University of Nebraska-Lincoln Extension educational programs abide with the non-discrimination policiesof the University of Nebraska-Lincoln and the United States Department of Agriculture.
  • 31. 2012 Value ofWheat IrrigationWithout Drought With DroughtIrrigated Non-Irrigated Irrigated Non-IrrigatedYield bu. 1 62 35 60 30Price bu. 2 $5.58 $5.58 $8.05 $8.05Total Cash Receipts $/acre $345.96 $195.30 $483.00 $241.50Production Costs $/acre 3 $292.64 $168.35 $283.20 $144.30Revenue $/acre $53.32 $26.95 $199.80 $97.20Attributed toIrrigation$/acre$26.37 $102.60Inches of WaterRequired, ET4 17.9 17.9Average Inches ofRain11.63 7.81Irrigation Needed 6.27 10.09$/inch of irrigation $4.21 $10.17Sources: B. Johnson & A. Giri Cornhusker Economics ‘Value of Irrigation in a Drought Regime: the case of 2012”Data: (1) Irrigated and Non-Irrigated Yields & Acreage, USDA NASS QUICK STATS (2) Prices 3 year average - Monthly Panhandle Crop Report 12/12, 2011/12 USDA NASS QUICKSTATPrice recieved Measured in $/bu. (3) Production Costs - J. Johnson 2012 No-Till Budget Packet - 1. Corn, Strip Tillage Continuous 12. Corn, No Till Dryland (4) D. Yonts, "Crop Water Use inWestern Nebraska" NEBGUIDE G1465$/inch of Irrigation
  • 32. 2012 Value ofWheat IrrigationWithout Drought With DroughtIrrigated Non-Irrigated Irrigated Non-IrrigatedYield bu. 1 62 35 60 30Price bu. 2 $5.58 $5.58 $8.05 $8.05Total Cash Receipts $/acre $345.96 $195.30 $483.00 $241.50Production Costs $/acre 3 $292.64 $168.35 $283.20 $144.30Revenue $/acre $53.32 $26.95 $199.80 $97.20Attributed toIrrigation$/acre$26.37 $102.60# of acres inPanhandle District 392,033 392,033Value of Irrigationin the NebraskaPanhandle$10,337,918.91 $40,222,620.00Sources: B. Johnson & A. Giri Cornhusker Economics ‘Value of Irrigation in a Drought Regime: the case of 2012”Data: (1) Irrigated and Non-Irrigated Yields & Acreage, USDA NASS QUICK STATS (2) Prices 3 year average - Monthly Panhandle Crop Report 12/12, 2011/12 USDA NASS QUICKSTATPrice recieved Measured in $/bu. (3) Production Costs - J. Johnson 2012 No-Till Budget Packet - 1. Corn, Strip Tillage Continuous 12. Corn, No Till Dryland (4) D. Yonts, "Crop Water Use inWestern Nebraska" NEBGUIDE G1465Total Value of Irrigation
  • 33. 2012 Value of DryBean IrrigationGreat Northern Beans Pinto BeansWithoutDroughtWith DroughtWithoutDroughtWith DroughtYield bu. 1 21.74 20.68 22.29 22.35Price bu. 2 $34.13 $41.54 $34.11 $47.09Total Cash Receipts $/acre $741.99 $859.05 $760.31 $1,052.46Production Costs $/acre 3 $584.81 $556.29 $599.60 $601.22Revenue $/acre $157.18 $302.76 $160.71 $451.25Inches of WaterRequired, ET4 15.6 15.6 15.6 15.6Average Inches ofRain11.86 7.81 11.86 7.81Irrigation Needed 3.74 7.79 3.74 7.79$/inch of irrigation $42.03 $38.86 $42.97 $57.93Sources: B. Johnson & A. Giri Cornhusker Economics ‘Value of Irrigation in a Drought Regime: the case of 2012”Data: (1) Irrigated and Non-Irrigated Yields & Acreage, USDA NASS QUICK STATS (2) 3 year average price - Monthly Panhandle Crop Report 12/12 , 2011/12 Annual Average Price (3)Production Costs - J. Johnson 2012 No-Till Budget Packet - 1. Corn, Strip Tillage Continuous 12. Corn, No Till Dryland (4) D. Yonts, "Crop Water Use in Western Nebraska" NEBGUIDE G1465$/inch of Irrigation
  • 34. 2012 Value of DryBean IrrigationGreat Northern Beans Pinto BeansWithoutDroughtWith DroughtWithoutDroughtWith DroughtYield bu. 1 21.74 20.68 22.29 22.35Price bu. 2 $34.13 $41.54 $34.11 $47.09Total Cash Receipts $/acre $741.99 $859.05 $760.31 $1,052.46Production Costs $/acre 3 $584.81 $556.29 $599.60 $601.22Revenue $/acre $157.18 $302.76 $160.71 $451.25# of acres inPanhandle District 64,423 64,423 61,785 61,785Value of Irrigationin the NebraskaPanhandle$10,126,020.02 $19,504,398.25 $9,929,522.96 $27,880,265.00Sources: B. Johnson & A. Giri Cornhusker Economics ‘Value of Irrigation in a Drought Regime: the case of 2012”Data: (1) Irrigated and Non-Irrigated Yields & Acreage, USDA NASS QUICK STATS (2) 3 year average price - Monthly Panhandle Crop Report 12/12 , 2011/12 Annual Average Price (3)Production Costs - J. Johnson 2012 No-Till Budget Packet - 1. Corn, Strip Tillage Continuous 12. Corn, No Till Dryland (4) D. Yonts, "Crop Water Use in Western Nebraska" NEBGUIDE G1465Total Value of Irrigation
  • 35. 2012 Value ofSugarbeetIrrigationWithoutDroughtWith DroughtYield bu. 1 23.36 20.95Price bu. $66.70 $66.70Total Cash Receipts $/acre $1,558.03 $1,397.30Production Costs $/acre 2 $628.38 $563.56Revenue $/acre $929.65 $833.74Inches of WaterRequired, ET3 29.7 29.7Average Inches ofRain11.63 7.81Irrigation Needed 18.07 21.89$/inch of irrigation $51.45 $38.09Sources: B. Johnson & A. Giri Cornhusker Economics ‘Value of Irrigation in a Drought Regime: the case of 2012”Data: (1) Irrigated and Non-Irrigated Yields & Acreage, USDA NASS QUICK STATS (2) Production Costs - J. Johnson 2012 No-Till Budget Packet - 1. Corn, Strip Tillage Continuous 12. Corn, NoTill Dryland (3) D. Yonts, "Crop Water Use in Western Nebraska" NEBGUIDE G1465$/inch of Irrigation
  • 36. 2012 Value ofSugarbeetIrrigationWithoutDroughtWith DroughtYield bu. 1 23.36 20.95Price bu. $66.70 $66.70Total Cash Receipts $/acre $1,558.03 $1,397.30Production Costs $/acre 2 $628.38 $563.56Revenue $/acre $929.65 $833.74# of acres inPanhandle District 64,423 64,423Value of Irrigationin the NebraskaPanhandle$59,890,850.54 $53,712,042.76Sources: B. Johnson & A. Giri Cornhusker Economics ‘Value of Irrigation in a Drought Regime: the case of 2012”Data: (1) Irrigated and Non-Irrigated Yields & Acreage, USDA NASS QUICK STATS (2) Production Costs - J. Johnson 2012 No-Till Budget Packet - 1. Corn, Strip Tillage Continuous 12. Corn, NoTill Dryland (3) D. Yonts, "Crop Water Use in Western Nebraska" NEBGUIDE G1465Total Value of Irrigation