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You Are Here Sunflower Magazine > 2001 NDSU Sunflower Production Budget


Sunflower Magazine

2001 NDSU Sunflower Production Budget
January 2001

NDSU Sunflower Production Budgets For 2001

Fuel will again be a leading input cost, and revenue will vary by producer





Sunflower production costs in North Dakota will increase in 2001, according to crop budgets for eight regions of the state released by the North Dakota State University Extension Service.



The cost of fuel will again be a key component driving up input costs for 2001. For oil sunflower, machinery costs, and fertilizer will also be higher compared to 2000, according to NDSU. In fact, fertilizer prices may be even higher next spring than what NDSU estimated in the 2001 crop budgets, according to Andrew Swenson, NDSU extension farm management specialist. Herbicide prices will be similar to last year, while crop insurance costs may decrease. The scenario is similar for confection sunflower, with an additional increase in the budget allotted for insecticide.



Following are sample budgets for oil and confection sunflower in south central ND. Swenson cautions that these crop budgets and budgets for other regions of the state are intended to be used only as guides because soil types, weather conditions, management, debt levels and production practices vary considerably from farm to farm in each region—which is why a column is provided in the budgets for producers to enter their own numbers.



On the revenue side, expect considerable variation between projections used in the budgets and reality, because supply is a price determinant, and weather has a significant effect on yield, both locally and globally. The budgets' projected yields use a seven-year average, which excludes the high- and low-yield years.



NDSU did not include NuSun premiums in its linoleic or conventional oil sunflower budget estimates, which would increase market income for oil sunflower. Further, the budget does not include additional price premiums for oil over 40%.



Like 2000, Swenson projects oilseed prices to remain below the marketing loan. If a price is attractive, it's a good policy to contract crops that have a thin market, he says. For the past several years, Swenson has recommended planting oilseeds because of favorable loan rates compared to feed grains and wheat, and once again the budgets would suggest the strategy of growing oilseeds that are best suited to a particular growing area. Then as now, however, oilseeds will require higher-than-average yields to garner a solid net return. As in any year, producers will need to consider how the entire rotation will affect current and future profitability and risk under different weather and price scenarios.



Profitability, Cash Flow



The PROFITABILITY budget accounts for full economic opportunity costs for land and machinery investment, regardless of farm operator equity position. The bottom line is the return to labor and management. This is the expected "payment" to the producer for the labor and managerial efforts required by the crop enterprise. Each individual must make the decision whether it is sufficient.



For short-run planning decisions you can omit the indirect costs if the land and machinery required to produce the different enterprises are in place. Simply compare the crop enterprises by calculating return over direct costs. Labor requirements and risk should also be considered. Insurance is not available for some crops.



The profitability budget can be used for long run decisions if the revenues and costs are realistic for several years. (Crop prices, direct costs, and the land tax and investment are best estimates for only the 2001 crop year, but crop yields are historic averages and machinery ownership costs are an average for the total length of ownership). If the budget shows a high return to labor and management, and is representative for several years, increased acreage and corresponding investment should be considered. However, if long-run returns to labor and management are unsatisfactory, the best decision may be to exit the crop enterprise and employ the machinery and land investment, and labor and management, in a different enterprise or investment.



The CASH FLOW budget shows the one-year cash flow feasibility of the crop enterprise. The net cash flow represents the cash left for family living, state and federal taxes, saving and investment after all the cash operating expenses and 2001 land and machinery debt obligations (principal and interest payments) have been met. It is assumed that there are loans on 40% of the land and machinery investment. In this case, no depreciation or provision for machinery replacement is considered.



The NDSU crop budgets are available on the Internet, at http://www.ext.nodak.edu/extpubs/ecguides.htm or http://www.ag.ndsu.nodak.edu/cropprod.htm. Note the assumptions NDSU used in formulating the budget estimations—they will be helpful in providing a baseline for estimating your own figures.

Crop budget information can also be found online the Kansas State University website, http://www.oznet.ksu.edu/library/agec2/F-MGT-GD.HTM, South Dakota State University, http://www.abs.sdstate.edu/ag_econ/budgets.htm, and the University of Nebraska, http://www.ianr.unl.edu/pubs/farmmgt/ec872/index.htm.





NDSU 2001 Oil Sunflower Production Budget Estimate, South Central ND



Market Yield 1350 Profitability Cash Flow Your

Market/Loan Price $ 0.093 Per Acre Per Acre Figures



MARKET INCOME* 125.55 125.55 ____________



DIRECT COSTS

-Seed 13.20 13.20 ____________

-Herbicides 11.00 11.00 ____________

-Fungicides 0.00 0.00 ____________

-Insecticides** 0.00 0.00 ____________

-Fertilizer 10.16 10.16 ____________

-Crop Insurance 3.50 3.50 ____________

-Fuel & Lubrication 8.70 8.70 ____________

-Repairs 10.77 10.77 ____________

-Drying 2.70 2.70 ____________

-Miscellaneous 1.00 1.00 ____________

-Operating Interest 3.05 3.05 ____________

======== ======== ============

SUM OF LISTED DIRECT COSTS 64.07 64.07 ____________



INDIRECT (FIXED) COSTS

-Misc. Overhead 4.09 3.04 ____________

-Machinery Depreciation 15.13 xxxxxx ____________

-Machinery Investment 12.60 26.31 ____________

-Land Taxes 4.85 4.85 ____________

-Land Investment 26.45 13.90 ____________

======== ======== ============

SUM OF LISTED INDIRECT COSTS 63.12 48.10 ____________



SUM OF ALL LISTED COSTS 127.19 112.17 ____________



RETURN TO LABOR & MANAGEMENT* (1.64) xxxxxx ____________

NET CASH FLOW* xxxxxx 13.38 ____________



LISTED COSTS PER BUDGET UNIT (lb):

-Direct Costs 0.05 0.05 ____________

-Indirect Costs 0.05 0.04 ____________

-Total Costs 0.09 0.08 ____________





notes:

* The NSA points out that the NDSU oil sunflower budget does not include price premiums for NuSun or oil over 40%.

** Red seed weevil insecticide would cost about $6 plus application.

Sunflower beetle insecticide would cost about $2 plus application.



NDSU 2001 Confection Sunflower Production Budget Estimate, South Central ND



Market Yield 1280 Profitability Cash Flow Your

Market Price $ 0.127 Per Acre Per Acre Figures



MARKET INCOME 162.56 162.56 ____________



DIRECT COSTS

-Seed 18.90 18.90 ____________

-Herbicides 11.00 11.00 ____________

-Fungicides 0.00 0.00 ____________

-Insecticides* 6.00 6.00 ____________

-Fertilizer 9.17 9.17 ____________

-Crop Insurance 4.30 4.30 ____________

-Fuel & Lubrication 8.63 8.63 ____________

-Repairs 10.74 10.74 ____________

-Drying 2.56 2.56 ____________

-Miscellaneous 5.20 5.20 ____________

-Operating Interest 3.82 3.82 ____________

======== ======== ============

SUM OF LISTED DIRECT COSTS 80.32 80.32 ____________



INDIRECT (FIXED) COSTS

-Misc. Overhead 4.06 3.01 ____________

-Machinery Depreciation 15.04 xxxxxx ____________

-Machinery Investment 12.53 26.16 ____________

-Land Taxes 4.85 4.85 ____________

-Land Investment 26.45 13.90 ____________

======== ======== ============

SUM OF LISTED INDIRECT COSTS 62.93 47.93 ____________



SUM OF ALL LISTED COSTS 143.25 128.25 ____________



RETURN TO LABOR & MANAGEMENT 19.31 xxxxxx ____________

NET CASH FLOW xxxxxx 34.31 ____________



LISTED COSTS PER BUDGET UNIT (lb):

-Direct Costs 0.06 0.06 ____________

-Indirect Costs 0.05 0.04 ____________

-Total Costs 0.11 0.10 ____________



notes:

*Red seed weevil insecticide.

Sunflower beetle insecticide would cost about $2 plus application.





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