Profits still possibleCrop prices have dropped, but farmers have a realistic chance of making money in 2014, a veteran North Dakota State University Extension Service farm management specialist says.
By: Jonathan Knutson, Agweek
Crop prices have dropped, but farmers have a realistic chance of making money in 2014, a veteran North Dakota State University Extension Service farm management specialist says.
“Not all crops will be as profitable as they’ve been in the past few years. But there are opportunities for profitability out there,” Andy Swenson says.
Swenson has released his 2014 Projected Crop Budgets, which estimate costs, gross income and net income for various crops in different parts of the state. Soil and climate varies greatly across North Dakota, influencing what crops are grown and how profitable they can be.
Swenson has prepared the annual projections for many years, and farmers across the state use them to help decide what crops to plant the next growing season.
Swenson says the 2014 estimates, though less attractive than those of the past few years, are still relatively encouraging.
“These projections are better than for a lot of years I remember,” he says.
Swenson’s most important conclusions for 2014:
• Farmers may not be able turn a profit from every crop they raise. Producers need to find a mix of crops that can be profitable.
• Projected returns for spring wheat and corn are “generally positive but paltry.” Projected returns for soybeans, the region’s third major crop, are relatively strong.
• Projected returns for a number of so-called minor crops, including canola, flax, dry beans, malting barley, peas and confection sunflowers, also are relatively strong.
• The cost of some inputs has dropped, partially offsetting the drop in crop prices. Lower fuel and fertilizer prices, for instance, will help producers’ bottom line.
• Farmers should be more aggressive than usual in forward-pricing some of their 2014 crops when doing so would provide an “acceptable profit.”
Corn, the star of Upper Midwest ag recently, won’t shine so brightly next year, according to the 2014 budgets. In some parts of the state, corn is even projected to be a net per-acre loser.
Corn’s potential profitability isn’t necessarily tied to how long it’s been grown in a particular part of the state.
For instance, spring wheat is a mainstay in northwest North Dakota, while corn only recently began to be grown there. In 2014, however, corn is projected to earn $18 per acre, with spring wheat projected to lose $8 per acre.
‘Minor’ crops look better
Because the state’s soil and climate vary so much, a wide range of crops is grown. North Dakota leads the nation in production of many crops, including flax and dry beans.
Even so, attractive corn and soybean prices in recent years have encouraged farmers to plant more of those crops and cut back on other crops.
That could change, at least to an extent, in 2014, according to Swenson’s projections.
Attractive flax prices, for instance, likely will encourage farmers to plant more of it, Swenson says.
In northeast North Dakota, for instance, flax is projected to return $71 per acre.
Malting barley, another important crop in the state, also looks relatively promising, offering potentially higher per-acre returns than other small grains, Swenson says.
Malting barley is projected to return $50 to $60 per acre in parts of the state, according to Swenson’s numbers.
But if barley doesn’t make malting quality and is sold at the lower feed price, farmers on average would lose about $40 per acre, Swenson says.
Producers need to consider the additional risk that malting barley, or any other crop, might bring, he says.
Good opportunities also exist in parts of the state for “low-acreage” crops such as yellow mustard, safflower and buckwheat, according to the 2014 projections.
Swenson emphasizes that the projections don’t reflect profit opportunties for every farmer. Producers should fine-tune numbers in the NDSU projections to reflect their individual situation, he says.
The 2014 estimates, as well as projections for past years, can be found at www.ag.ndsu.edu/farmmanagement/crop-budget-archive.