Enterprise Budgets Provide Another Tool to Evaluate Your Planting Decisions

Barry Ward
Leader, Production Business Management
Ohio State University Extension and Department of Agricultural, Environmental and Development Economics

Wet weather and atrocious planting conditions in Ohio in 2011 have led to a lot of hand wringing this year. Tough decisions lay ahead for many Ohio farmers as we approach June 5th, the “final planting date” for corn for crop insurance purposes. After this date, producers may take prevented planting payments on the farm or see their crop insurance coverage decrease each day of delay. Comparing your prevented planting payment to potential returns to corn or soybean planting may be a daily activity as we enter June.

Enterprise budgets comparing corn and soybean returns have been compiled and posted to our Enterprise Budget webpage to show an example of what late planting economics might look like for corn and soybeans.
http://aede.osu.edu/Programs/FarmManagement/Budgets/crops-2011/index2011.htm

For the “Late Planting Budget” (Planting date May 28 through June 5) we assume corn suffers a 21% yield loss while soybeans suffer a 10% yield loss. Corn drying costs are also increased in this late planting scenario.

“Returns to Labor and Management” is a measure that is calculated by subtracting all expenses except unpaid operator labor and management from gross revenue. “Returns to Labor and Management” for corn planted during this window (assuming 155bpa yield in a normal year and 122bpa due to late planting) are estimated to be $184/acre. “Returns to Labor and Management” for soybeans planted during this late window (assuming 48bpa yield in a normal year and 43.2bpa due to late planting) are estimated to be $183/acre. These returns can be compared to your Prevented Planting Payment less any expenses to assist in your decision making. Although many costs will be saved by taking the prevented planting route, some costs remain and should be counted against your prevented planting proceeds. Age and obsolescence related fixed machinery costs and fixed land costs are incurred regardless of whether you produce a crop or not. There may also by chemical, fertilizer, crop insurance and interest expenses that were incurred regardless of your prevented planting decision.

The big unknown in this analysis is the relative prices for corn and soybeans at harvest. Our assumptions for this set of budgets are a fall cash price of $6.40 per bushel for corn and $13.05 per bushel for soybeans. Fewer acres due to prevented plantings may change these price expectations.

Your numbers will, of course, differ from these. Download the spreadsheets to calculate returns for you farms. There is also a new Decision Aid tool titled “Estimated Yield and Profit by Planting Date – Corn, Soybeans or Preventative Planting Crop Insurance” that may be valuable as you contemplate this important decision. It is available online at:
http://ohioagmanager.osu.edu/farm-policy/new-decision-aid-to-determine-late-planting-options/

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