Crop Costs & Returns in a High Input Strategy versus Common Practices

1. Crop Costs & Returnsin a High Input Strategyversus Common Practices Kent Olson, Bruce Potter, Steve Quiring, Jeff Vetch, Tom Hoverstad, Seth Naeve, Dale Hicks, and Ahnna Olson University of Minnesota June 12, 2007

2. The situation • Corn and Soybean yields increasing • Minnesota—annual 1.8% corn yield increase and 1.4% soybean yield increase • Costs continue to increase • Small profit margins • Interest in very high yielding corn and soybeans • Over 400bu. corn and 100bu. soybeans • Ethanol increasing demand for corn

3. Today’s Overview • Description of study • Yield results • Estimated costs of production • Estimated net returns

4. WASECA site High Yield Corn Production at Waseca: tillage and nutrient management strategies • Began with Fall tillage in 2003 • Corn-Soybean Rotation • Corn Planted: • 2004 & 2006 Site A—Webster Clay loam • 2005 Site B—Nicollet clay loam • Finishing in 2007 with soybean

5. WASECA site Treatments at SROC • Three Nutrient Strategies: • University of Minnesota recommendations (UM recs) • High Inputs • Variable Inputs • Two tillage treatments • Fall: none or 16” Deep Zone Tillage (DZT) • Spring: Field Cultivate (SFC) or none

6. WASECA site Nutrient strategies • UM recommendations • Starter Nitrogen, UAN with herbicides, sidedress Nitrogen • High-Input • Fall Nitrogen, Starter Nitrogen, UAN with herbicides, sidedress Nitrogen, Broadcast P & K, M500 ™, sulfur • Variable Input • Starter Nitrogen, UAN with herbicides, sidedress Nitrogen, 9-24-3, SureK™, M500 ™ , sulfur

7. WASECA site Corn Yields Southern Research and Outreach Center Waseca, Minnesota 2004-2006

8. WASECA site Corn Yields at Waseca:UM Rec’s vs. High Input

9. WASECA site Corn Yields, SROCand MN Averages

10. WASECA site Costs of Production • Inputs and operations used on trials • Machinery costs from Lazarus & Selley late 2005 and a few from Iowa custom survey • Typical input costs for Southern Minnesota

11. WASECA site Costs for Corn with UM Recommendations

12. WASECA site Costs for Cornwith High Inputs

13. WASECA site Corn Production Cost Summary - Waseca

14. WASECA site Estimated Returns to Land, Management, & Overhead Using treatment yields and estimated costs of production

15. WASECA site Returns from Corn to Land, Management & Overhead

16. WASECA site Concluding Comments - Waseca • “High Input” has highest yields • Similar Costs per bushel • Except HI DZT has higher costs • High Input has a slightly higher returns as corn price increases

17. LAMBERTON Treatments at SW ROCat Lamberton • Two strategies: • Common practices • High input strategy • Three cropping sequences: • Continuous corn • Corn-Soybean • Soybean-Corn

18. LAMBERTON Cultural practices • Common practices strategy • University or common recommendations • Fall urea or anhydrous, some starter fertilizer • 34,000 seeds/ac for corn • High Input strategy • Fall urea, plus beef manure in alternate years • Higher spring NPK plus sulfur and zinc, higher starter, side-dress N in June • 38,000 seeds per acre • Tillage: moldboard in ’03 • then on high input and continuous corn • Weed control was the same • Insecticide applied to continuous corn

19. LAMBERTON Corn and Soybean Yields Southwestern Research and Outreach Center Lamberton, Minnesota 2004-2006

20. LAMBERTON Corn Yields, SW ROC

21. LAMBERTON Corn Yields, SW ROC

22. LAMBERTON Corn Yields, SW ROC and Minnesota averages MN ave. for ’06 is Nov 1 forecast

23. LAMBERTON Soybean Yields, SW ROC

24. LAMBERTON Soybean Yields, SW ROC

25. LAMBERTON Soybean Yields, SW ROC and Minnesota averages MN ave. for ’06 is Nov 1 forecast

26. LAMBERTON Costs of Production • Inputs and operations used on trials • Machinery costs from Lazarus & Selley late 2005 & a few from Iowa custom survey • Typical input costs for Southwestern Minnesota

27. LAMBERTON Costs for “Common Practices”

28. LAMBERTON Costs for “High Input Strategy” With no charge for the nutrients in manure

29. LAMBERTON Production cost summary

30. LAMBERTON Production cost summary

31. LAMBERTON Production cost summary with charge for manure nutrients 4.06 3.64 9.68

32. LAMBERTON Estimated Returns to Land, Management, and Overhead Using treatment yields, estimated costs of production, and three price levels (starting with current “adjusted” target prices)

33. LAMBERTON Returns to Land, Management & Overhead by Rotation SB/C price ratios: 2.32

34. LAMBERTON Returns to Land, Management & Overhead by Rotation SB/C price ratios: 2.32, 1.92

35. LAMBERTON Returns to Land, Management & Overhead by Rotation SB/C price ratios: 2.32, 1.92, 2.03

36. LAMBERTON Concluding comments • In this study: • “High Input” has highest yields • Corn in a C-SB rotation has higher yield than Continuous Corn • In both “Common” and “High” • “Common Practices” has lowest costs • Both per acre and per bushel

37. LAMBERTON Concluding comments, page 2 • At current target prices, “Common” C-SB has the “highest” net return • As prices rise & SB/C price ratio declines: • “Common” Continuous Corn net return increases above C-SB net return • But not for High Input • “Common Practices” still remains more profitable than “High Input”

38. Overall Concluding Comments • “High Input” has higher yields • High Input has a slightly higher corn returns as corn price increases • As prices rise & SB/C price ratio declines: • “Common” Continuous Corn net return increases above C-SB net return • But not for High Input • “Common Practices” still remains more profitable than “High Input”

39. Questions? Comments? Thank you!