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12
Sep
2013
Profitability Outlook – 2014
Author: Chuck Danehower, Extension Area Specialist - Farm Management 2 Comments

As crop harvest for 2013 has started in earnest, planning and cropping decisions shift to the 2014 crop. With wheat seeding just around the corner, the 2014 crop plan has started.  This table should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems. For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: cotton – $ 131, Soybeans – $48, Corn – $146 (includes 150 units of N), Milo – $118, and wheat/soybeans – $115. As we start to look at 2014 cropping decisions, cost of production will be adjusted as information becomes available. At this time, wheat does look like a viable crop for 2014 with as much profit potential as the other crops. Weed control costs with resistant weeds have also been difficult to estimate. These costs will vary greatly among producers and individual fields.  Production costs are estimates based on the 2013 University of Tennessee Crop Budgets. Please visit with your farm supplier on estimated cost in your area.

Producers with owned land and or cash rent can use Returns Over Variable as a guide in decision making. Producers with share rent ground should use Returns Over Variable and Land Costs as a guide with their appropriate share rent calculated. A land cost of 25% of revenue is used in the table as a guide or method of comparison and should not be construed as the appropriate rent for a particular area. Producers who are not making major equipment changes can use UT budgets and this table as a guide in developing their own cropping decision budgets. If equipment changes are being made, then a whole farm financial plan would be better suited as a decision aid. Please contact your local County Extension office or Area Specialist – Farm Management for assistance in developing your own budget or farm financial plan.

 

2014 Estimated Returns

Cotton

Soybeans

Corn

Milo

Wheat/Soybeans

Yield

876 lbs.

38 bu.

127 bu.

80 bu.

61 bu./28 bu.

Price (as of 9/12/13)

$0.78 lb.

$12.07 bu.

$4.90 bu.

$5.12 bu.

$6.42 bu./$12.07 bu.

Revenue

$683

$459

$622

$410

$730

Variable Expenses

$483

$265

$358

$228

$425

Returns Over Variable

$200

$194

$265

$182

$304

Land Costs (25% of Revenue)

$170

$115

$156

$102

$182

Returns Over Variable and Land Costs

$30

$79

$109

$79

$122

Fixed Costs
Depreciation & interest on machinery

$70

$45

$43

$34

$90

Returns Over Specified Costs

-$40

$35

$66

$46

$32

Breakeven Price at Average Yield and Specified Cost

$0.83

$11.16

$4.38

$4.55

$6.16/$11.47

 

 

 

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2 Responses to Profitability Outlook – 2014

  1. Richard Jameson says:

    As we approach the starting line for the 2014 crop year, corn & wheat/beans are again the early favorites. It is hard to believe that after variable costs 876# cotton only beats 38 BPA beans by $6.00/acre. Why would you plant cotton? A management approach with crop diversity as a key component is under increasing pressure in this environment.

    • Chuck Danehower, Extension Area Specialist - Farm Management says:

      Richard,
      Volatile or uncertain prices can make diversification a key to survival. There is probably more potential downside to grain prices for 2014 than cotton. I tend to favor at least some mix of the crops if producers are set up for it.