Fargo, North Dakota
January 15, 2009
The
North Dakota State
University Extension Service has updated the
Crop Compare program, which is a spreadsheet designed to
compare cropping alternatives.
The program uses the direct costs and yields from the 2009
projected crop budgets for nine regions of North Dakota, but
producers are encouraged to enter the expected yields and input
costs for their farm.
The user designates a reference crop and enters its expected
market price. The program provides the prices for competing
crops that would be necessary to provide the same return over
variable costs as the reference crop.
Producers can compare these "breakeven" prices to expected
market prices to see which crop is most likely to compete with
the reference crop. Input costs and grain prices can move
quickly. The program provides a tool for producers to check the
changing scenarios until final planting decisions are made this
spring.
It should be noted that an underlying assumption is that fixed
costs, such as machinery ownership, land, and owner's labor and
management, do not vary between crop choices and therefore do
not need to be included in the analysis.
In practice, there may be differences in fixed costs that should
be considered.
For example, there may be additional labor, management and risk
associated with a competing crop. If the owner-operator provides
all the labor and management, it would be considered a fixed
cost and could be excluded. However, the producer should add
some cost if he or she would want to produce the crop only when
an adequate reward would be received for the extra time and
management required relative to the reference crop.
A similar rationale could be used if a competing crop is
considered a higher risk.
The Crop Compare program is available at
www.ag.ndsu.nodak.edu/aginfo/farmmgmt/farmmgmt.htm. |
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