Budgets Vs. Reality: A Look at Crop Revenues

By Brent Gloy

With the new crop planting beginning, or right around the corner for the Corn Belt, much has been made of 2015 crop budgets which show significant loss potential for row crop farm operators. As we pointed out in an earlier post, the budgeted losses are bigger than any in the last 20+ years. We are frequently asked how budgeted values have corresponded to actual outcomes. While budgets are great tools and very useful in planning and understanding how producers will make planting decisions, it is quite likely that the actual outcomes achieved will be substantially different than those forecast at planting. Price and yield deviations from budget are one of the biggest drivers of these differences.

We thought it would be interesting to look at the relationship between budgeted and actual revenues over time. Specifically, we compared actual market year average (MYA) prices and county level yields to those found in the Purdue crop budgets. This should provide some indication of how prices and yields vary relative to budgeted values. The results carry the caveats that farm level yields can be more or less variable than the county average and that there is no guarantee that a farmer will receive a price that matches the state-level marketing year average (MYA) price. These caveats aside, the results of the analysis provide some insight into how actual outcomes correspond to pre-plant crop budgets.

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New Paint: A Look at Changes in Equipment Ownership Costs

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by

David A. Widmar

As farm incomes jumped in recent years, so did the interest in newer farm equipment. While the reasons producers update their equipment line can vary from increasing efficiency to managing taxable income, it’s important to understand how these changes may impact the underlying cost of production.

For a high-level look at changes in the machinery cost structure across agricultural operations, data from the Kansas Farm Management Association (KFMA) and the Illinois Farm Business Farm Management Association (Illinois FBFM Association) were used. Three components of machinery ownership were considered; depreciation, machinery investment, and machinery expense.

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A Case for Lower Corn Seed Expenses

by
David A. Widmar

August 24: corn-sign rows

While most of the 2014 corn crop is still in the field, planning for the 2015 crop is underway. Long before the combines start fall harvest, the importance of the 2015 budget will begin to come into focus.

The big story in 2015 will be lower commodity prices, especially for corn and soybeans. The question on many producer’s minds is how much, if any, relief might come from lower input prices?

A look at 13 years of historic Purdue Crop budgets reveals an interesting trend in corn seed expenses.

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