ND Farm and Ranch Business 
Management Education Association

Crop Selection Demands Real Time and Effort

Ron Smithberg, Farm Business Management Instructor, Casselton , ND

With the large swings in almost every aspect of producing and selling a crop during the past year, it is important to know how the crops, producers have at their disposal to grow, really compare in dollars and cents.

 A quick and easy way to compare crops is to look at what is called a partial budget. A partial budget looks at each crop’s individual income, minus only those expenses (direct expenses) that are typically different when you switch crops.   It then compares what is left as a return over direct expenses between the crops.  As you probably guessed, this has nothing to do with profitability, it is only a comparison to determine which crop will return the most dollars after paying its direct expenses.  The money left then pays rent, overhead costs, principle payments, living expenses and other outflows associated with a farming operation.

 The numbers below are really secondary.  The process is more important as you need to use your own numbers, which along with your rotational, capital and labor needs determine the crops that best suit your operation. The NW costs and prices as of the end of November in Divide County , which is located in the NW corner of the state and the EC costs and prices are from Cass County .

In the NW budget, peas and flax were compared to durum at $6.50/bu. to determine what price each crop would need to be equal to durum’s return over direct expenses.  However, without a futures market a good 2009 price comparison is difficult.  By using historical crop price differences in your area, it can aid as a guideline to determine where the pea and flax prices usually are compared to durum, at least in this example. 

 With the crops used for the eastern example we have a futures market we can utilize in this early look at 2009.  As we have seen in a number of projections over the years, wheat again does not pencil out (with these numbers), the wheat price needed to is about $1.00 higher than the current new crop wheat bid, with corn & soybeans being very close.

 As previously mentioned, always use your own numbers as well as analyzing your own rotational, storage, machinery and labor needs.  Also, as many of these numbers have been changing frequently, it is recommended that producers update this budget frequently. To input your own numbers you can locate this spreadsheet on the ND Farm Business Management website at ndfarmmanagement.com 

 Producers will find additional information on this and other crop and livestock topics as well as a variety of other farm data at the afore-mentioned website.  Additional information on the North Dakota Farm Business Management Program may be secured by contacting Steve Zimmerman, State Supervisor for Agricultural Education at the State Capitol, at 701-328-3162.  The Farm Business Management program is sponsored by the North Dakota State Department of Career and Technical Education.

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Last modified: August 25, 2010