Profitability Outlook

This table should be used as a guide as yields, prices, and expenses will vary among producers and locations. This table looks at crop prices as of May 10, 2012 for 2012 and can give a glimpse of what crop profitability is in Tennessee as of this date. One of the expense items that have to be watched is fertilizer. Fertilizer cost, particularly nitrogen prices have gone up recently for producers who did not have it already priced. I have updated the table below to reflect this higher cost.   For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: cotton – $ 155, Soybeans – $53, Corn – $186 (includes 150 units of N), Milo – $145, and wheat/soybeans – $138. Production costs will be updated as we go through the year. Due to the warm spring, additional burndowns are needed in cotton (+$39 chemical) and soybeans (+$11 chemical) and the increased chemical and sprayer cost have been updated. 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.

 

2012 Estimated Returns

 

Cotton

Soybeans

Corn

Milo

Wheat/Soybeans

Yield

850 lbs.

40 bu.

125 bu.

90 bu.

60 bu./28 bu.

Price (as of 05/10/12)

$0.82 lb. 1)

$13.76 bu.

$4.88 bu.

$4.64 bu.

$6.19 bu./$13.76 bu.

Revenue

$697

$550

$610

$418

 

$757

Variable Expenses

$522

$226

$346

$245

$431

Returns Over Variable

$175

$324

$264

$172

$326

Land Costs (25% of Revenue)

$174

$138

$153

$104

$189

Returns Over Variable and Land Costs

$1

$187

$111

$68

$137

Fixed Costs
Depreciation & interest on machinery

$79

$42

$39

$34

$83

Returns Over Specified Costs

($78)

$145

$72

$34

$54

1) Cotton price includes the price of lint and estimated seed and hauling rebates from the gin. 

Some differences have occurred due to rounding

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One thought on “Profitability Outlook

  1. The quality of the information on this blog is excellent.
    It is easy to see why cotton acres have declined this year. When you spend $500+ per acre to potentially make $1 on rented ground there is little incentive to go in that direction.
    Input costs for insect & weed control will be higher than origiinally thought due to the unusually dry & warm winter & early spring.
    There is still a long way to go with the 2012 crop and the net income figures will certainly change. As far as risk management goes, being diversified proves again to be a cornerstone principle.

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