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Organic CropProduction Costs for 2018

Manitoba Ag Days – January 18, 2018

Roy Arnott, P.Ag.

Farm Management Specialist

What we already know…• Doing your cost of production for

your own farm is the starting point for profitability.

• Determining your cost per bushel sold will allow you to build an effective marketing plan.

• Each year is different! Profitability and risk is dependent on the relationship between yield/price/costs with your financial situation. (Plan for Prosperity)

Outline:Grain Markets & YieldsCOP Summary & AnalysisAgriInsurance AnalysisOrganic vs. ConventionalLand Rental Cost – How Much is Too Much?CropPlan Calculator & Other Tools

2018? Good, Bad or Ugly?

CAUTION:Objects in the Mirror are

Closer Than They Appear!

CAUTION:Objects in the Mirror are

Closer Than They Appear!

150.8 

13.4  12.2 6.2 

31.4 

8.5 

198.1 

19.0  17.1 8.6 

45.5 

11.5 

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 110.0 120.0 130.0 140.0 150.0 160.0 170.0 180.0 190.0 200.0 210.0 

Hemp Winter Wheat Wheat Brown Flax Oats Soybeans

Yield Pe

r Acre

Manitoba Organic Breakeven Yields (per Acre) ‐ 2017

Breakeven Yield Over Operating Costs

Breakeven Yield Over Op & Fixed Costs

$6.35

$2.43

$3.50

$6.49

$1.51

$5.68

$9.36

$4.10

$5.72

$11.21

$2.80

$9.10

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

Canola Winter Wheat Wheat Flax Oats Soybeans

$/Unit

Manitoba Breakeven Price ($/unit) ‐ 2017

Operating Costs Operating & Fixed Costs

Fixed Cost Management ‐ Conventional

Operating Costs65%

Margin Over Operating

35%

• Gross Revenue = Price x Yield Per Acre

• Margin Over Operating Cost = Gross Revenue – Operating Costs

Operating Costs65%

Land Cost18%

Equipment Cost12%

Owner Withdrawl

5%

Fixed Cost Management ‐ Conventional

Fixed Cost Management ‐ Organic

• Gross Revenue = Price x Yield Per Acre

• Margin Over Operating Cost = Gross Revenue – Operating Costs

Operating Costs43%

Margin Over Operating

57%

Operating Costs43%

Land Cost18%

Equipment Cost12%

Owner Withdrawl

27%

Fixed Cost Management ‐ Organic

Cash Rent Based on Gross Revenue

• Average range of cash rent across western Canada is 18 to 22%of gross revenue.

• But how much is too much???

Breakeven Land Rent Calculation

Gross Revenue‐ Operating Cost‐ Equipment Cost‐ Labour Cost‐ Storage Cost = Cash for Land Rental

Land Rent Based onInvestment Return on Land Value

(Landowner check & balance)

Land market value $2,800 per acrex  Long Term Investment Rate (5yr) 2.75 %+  Property taxes  $15.00 per acre          Total Cash Land Rental  $92.00 per acre

Analysis specific to your own farm  

Reseeding Decision Tool - Canola*** Enter/select changes to items in BLUE only ***

Farm Information:MASC - Risk Area RA #2MASC - Soil Zone EMASC - Individual Productivity Index (IPI) 1.00MASC AgriInsurance Coverage level 80%Calculated MASC Probable Yield (bu/ac) 34.6Original Crop CanolaReseeded Crop CanolaEstimated Market Price ($/bu) $10.89

Damaged Canola Plant Stand Evaluation: Plants/m2

Field Sample Plant Counts/m2 15 * enter up to (5) plant counts in the boxes to the right

* leave entries blank if less than (5) counts were taken

* 10.8 plants/m 2 = approx. 1 plant/ft 2

Average Plant Count/m2 15.0Plant Count - Yield Factor 0.75Estimated Yield (bu/ac) 26.0Estimated Gross Revenue ($/ac) $282.60

Reseeding Decision Tool - Canola

Canola Reseeding Evaluation: Reseed Date 1st week JuneDate - Yield Factor 0.8953Estimated Reseed Yield (bu/ac) 31.0Estimated AgriInsurance Reseeding Indemnity ($/ac) $75.36Estimated Seed Company Reimbursement ($/ac) $0.00Reseed Seed Costs ($/ac) $60.00Reseed Machinery Costs ($/ac) $15.00Estimated Gross Revenue ($/ac) $337.95 (net reseeding indemnity, reimbursements & expenses)

Estimated Benefit (Cost) of Reseed Decision ($/ac) $55.35

Farm Software & Worksheets (Crops)

• http://www.gov.mb.ca/agriculture/business‐and‐economics/financial‐management/farm‐software‐and‐worksheets.html

• Farm Machinery Custom & Rental Rate Guide Calculator ‐ 2016/17

• Crop Land Purchase Values – 2016• Crop Land Rental Rate ‐ 2016• Crop Share Lease – 2017• FertPlan ‐ 2017• Grain Bin and Farm Building Rental 

Cost Planner• Grain Drying Cost Calculator• Sclerotinia Treatment Decision Tool 

(Canola and Sunflower versions)

Obviously you’re telling me…• Those who produce the most, profit the most.

• The more accurate your own numbers, the greater your chances are for profitability.

• It’s vital to know the risks and rewardsof the different crops.

• Before seeding, compare crops for profit probability.

• After seeding, update your actual coststo keep on top of profitability

Questions ?For more informationVisit our website:                        

www.manitoba.ca/agriculture

Follow us on Twitter:                                               @MBGovAg

View our videos on YouTube: www.youtube.com/ManitobaAgriculture

Contact me:Roy Arnott, P.Ag.roy.arnott@gov.mb.caKillarney Ag Office ‐ 204.523.6424