Projecting 2018 crop profits
Given current crop prices, the overall 2018 profit outlook for North Dakota farmers isn't as dismal as might be expected, a veteran North Dakota State University extension service economist says.
"Things look a little better than I thought they would," says Andrew Swenson, NDSU extension farm and farm resource management specialist.
Even so, at current prices, some farmers across the state are unlikely to finish in the black in 2018 unless they enjoy better-than-average yields, he says.
Wheat, corn and soybeans are the region's three major crops. Swenson projects that wheat and soybeans can be profitable in much of North Dakota in the 2018 growing season, but that corn is unlikely to be.
"Corn is the bugaboo," he says, noting that corn is relatively expensive to raise and that the current price farmers receive for it is relatively low.
Swenson prepared the 2018 NDSU Projected Crop Budgets, which estimate per-acre yields, prices and potential profits for a number of crops in nine regions of the state.
The popular annual projections, on which Swenson has worked for many years, are aimed at North Dakota producers. But they can be useful for producers in adjacent states, too. For example, farmers in eastern Montana generally grow the same crops as their counterparts in western North Dakota.
The 2018 projections bode well for wheat, which has been relatively unprofitable in recent years, causing wheat acreage to drop.
"I think we could be seeing more wheat (planted) this year," Swenson says.
Wheat prices strengthened last summer, increasing the crop's potential profit in 2018.
One example: The 2017 projected crop budgets, released in late 2016, forecast a loss of $10.21 per acre for spring wheat in north-central North Dakota. In contrast, the 2018 projections call for a gain of $18.10 per acre for spring wheat in that area.
Soybeans, which typically fare well in the annual budget projections, do so again this year.
In the northern Red River Valley, for example, soybeans are one of the few crops in Swenson's projections that show a positive return ($24.85 per acre.) Corn is projected to lose $33.74 per acre, with spring wheat losing a projected $1.47 per acre.
But corn, which in the early part of this decade often provided North Dakota farmers with strong gains, isn't promising this year, according to the NDSU projection.
In the southern Red River Valley, the area of the state in which corn has the longest history, the crop is projected to lose $47.07 per acre. In contrast, spring wheat is projected to lose $11.63 per acre and soybeans is expected to earn $24.08 per acre.
Corn projects relatively well in western North Dakota, where the crop remains fairly new, however, Swenson notes. Corn yields are substantially lower in the western part of the state, but that's more than offset by much cheaper land costs there.
In southwest North Dakota, corn is projected to lose $1.75 per acre, a much-smaller loss than in most of the rest of the state.
Even so, most other crops, including spring wheat and soybeans, are projected to make a profit in southwest North Dakota, limiting corn's appeal there, too, Swenson says.
Lentils — which are growing in popularity with both U.S. consumers and western North Dakota and eastern Montana farmers — have been profitable for farmers there in recent years. The 2018 NDSU crop budgets project that will continue.
The crop is pegged for a profit of $55.43 per acre in southwest North Dakota and $44.48 per acre in northwest North Dakota.
Malting barley, a crop in which North Dakota has long been a national leader, isn't promising in 2018, according to the new NDSU budgets.
Prices for malting barley, which is risky to grow because of potential weather and disease issues, are low and probably will discourage many farmers from growing it, Swenson says.
The NDSU budgets include a projected return to labor and management, or a "payment" to the farmer for his or her labor and managerial efforts required to grow that crop, Swenson notes.
He stresses that the projections are just estimates, and that gain or loss will depend on actual yields and prices.
To see the budgets: www.ag.ndsu.edu/farmmanagement/crop-budget-archive.