Healthy soil and sustainable growing

["TradingPostPaul" <tradingpost@riseup.net>]

Prices are up but so are costs. And since farmers' prices are up, so are
food prices. Didn't I say months ago that farmers' costs and food were
headed up?  

paul tradingpost@lobo.net
------------------------------------------

"Fertilizer, seed, crop insurance and fuel lead the cost hit parade.
Fertilizer prices are about 50 percent higher. To make things worse, soil
tests are lower, so more of the expensive fertilizer is needed to meet
similar yield goals.

"Seed costs, particularly for small grains, are higher. The price of barley
and spring wheat seed is 50 percent to 75 percent higher, flax is double
and durum has nearly tripled in cost. Corn seed is about 15 percent higher.
Sunflower and soybean seed costs increased 5 percent to 10 percent."
--------

Costs and grain prices explode in 2008 crop budgets
http://www.theprairiestar.com/articles/2008/01/05/ag_news/farm_and_field/fie

ld11.txt

By Andrew Swenson, Farm Management Specialist NDSU Extension Service
Saturday, January 5, 2008 1:43 PM MST
  

Farming in 2008 is shaping up to be one for the history books. Never have
both costs and grain prices been this high. Costa and grain prices are
competing forces when it comes to profit. Fortunately, grain prices should
prevail.

Recent history provides a perspective. Prior to 2007, it was difficult to
project a positive return to labor and management for most crops. It was
not uncommon to project a loss for spring wheat, North Dakota's largest
crop, in nearly every region of the state. Despite higher costs, this
changed in 2007 because of better crop prices and most crops projected
positive returns across the state.

It looks even better for 2008. Projected returns are the best that I have
seen in 17 years of preparing crop budgets. All crops should be profitable,
except for oats and rye.

There is a negative. Costs have increased at a strong pace each year since
2002. Record high per-acre costs have been set every year since 2003.

For 2008, the increase in costs is stunning. Total direct cash costs per
acre will increase, on average, by about 30 percent. The increase in total
direct and fixed costs will average about 20 percent per acre.

Soybeans and dry edible beans will have the smallest increase in total
costs, about 10 percent, while durum will have the largest at more than 30
percent. For example, total costs, excluding any labor and management, of
spring wheat production in the east-central region (Foster and adjacent
counties) was projected at about $190 per acre for 2008, compared with $150
per acre in 2007.
  

Fertilizer, seed, crop insurance and fuel lead the cost hit parade.
Fertilizer prices are about 50 percent higher. To make things worse, soil
tests are lower, so more of the expensive fertilizer is needed to meet
similar yield goals.

Seed costs, particularly for small grains, are higher. The price of barley
and spring wheat seed is 50 percent to 75 percent higher, flax is double
and durum has nearly tripled in cost. Corn seed is about 15 percent higher.
Sunflower and soybean seed costs increased 5 percent to 10 percent.

Increases in crop insurance premiums typically will range from 20 percent
to 50 percent because crops are insured at a higher price.
  

Very strong crop prices are the cause of positive projected returns in an
environment of increasing costs. For example, in the five years prior to
2007, the oil sunflower and canola price averaged about 11 cents per pound.
The price increased in 2007 and for 2008, the projected price is about 20
cents per pound.

Crops that have higher production risk and require more management and
labor can project the greatest returns to labor and management. Dry edible
beans, confectionery sunflowers, yellow mustard and lentils project the
highest returns to labor and management at more than $100 per acre for
2008. Malting barley returns per acre are projected to be between $80 and
$100, depending on the region. However, projected returns drop
significantly, to between $0 and $20, if feed-quality barley is produced.

Soybeans, oil sunflowers and canola also show strong returns to labor and
management, at between $50 and $100 per acre, depending on the region. The
best canola returns are in the north-central and northeastern regions (west
of the Red River Valley) and the highest returns for soybeans occur in the
southeastern and southern valley regions.

Spring wheat, durum and winter wheat all show positive returns. Winter
wheat projected a greater return in all regions compared with spring wheat
or durum, except for durum in the southwestern part of the state. Although
it varies significantly by region, winter wheat returns to labor and
management averaged about $55 per acre, compared with about $35 for spring
wheat. Flax, buckwheat and field peas also projected solid returns to labor
and management, ranging from $30 to $60 per acre.

High costs hurt corn relative to soybeans. In the eastern half of the
state, the per-acre return to labor and management ranged from $0 to $50
for corn, compared with $50 to $100 for soybeans.

In summary, 2008 provides an opportunity for producers to generate strong
returns to make up for lean years they may have experienced in the past.
The downside is that more dollars will be invested in a crop than ever
before and the financial risk is greater if projected prices and yields do
not materialize.

The budget projections are intended to be used only as a guide. Producers
are encouraged to develop their own budgets. Commodity prices and yields
are extremely difficult to predict. It is critical to evaluate crop
insurance and consider the financial downside risk, as well as the upside
potential, of the crop rotation.

The budgets are available on the Web at http://www.ext.nodak.edu/extpubs/

ecguides.htm and your local county Extension office.