NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665

January 7, 1998

New N.D. Crop Budgets Show 1999 Costs Down

Costs of crop production in North Dakota will decline for 1999, according to crop budgets for eight regions of the state published by the North Dakota State University Extension Service. However, most crops in each region show negative returns due to low commodity prices.

"Direct production costs will drop in 1999," says Andrew Swenson, farm management specialist with the NDSU Extension Service. "Prices for inputs such as fuel, fertilizer and seed for spring wheat, durum, barley, and flax are down from last year. Interest rates are also down, but producers whose balance sheets have deteriorated may not see much of a benefit because of a higher risk rating."

Prices for sunflower, soybean, corn and canola seed should be relatively flat, depending on the retailer. Also, the price of most chemical products will be flat. Swenson believes producers will be holding costs down in anticipation of a lean year.

Projected prices for oilseeds and feed grains are only slightly above the loan rate, Swenson says. However, projections for spring wheat and durum, at about $3.50 and $4.00 per bushel, respectively, are most optimistic relative to current prices.

"Some of the specialty crops, such as confectionery sunflower, safflower, mustard, lentils, crambe and buckwheat appear to show more promise than traditional crops in certain regions, but prices for many of these crops are also down," says Swenson. "Producers need to take into account production risk and crop insurance coverage, as well as price risk, as they decide what to grow this year."

Durum and specialty crops look like the best choices in the northwest and north central regions. Dry edible beans appear favorable for the south central region. Canola shows some profit potential in the northeast region. However, the south valley region is in somewhat of a dilemma, Swenson says. In previous years the profit projections for soybeans have been good, but the 1999 crop budget projects only a $5 return to labor and management per acre.

Projected returns to labor and management from spring wheat range from a positive $8 per acre in the south central region to a negative $12.50 per acre in the northern area of the Red River Valley. Returns to barley are projected to be negative in all regions.

Swenson cautions that NDSU Extension Service crop budgets are intended to be used only as guides because soil types, weather conditions, management, debt levels and production practices vary considerably from farm to farm in each region—which is why a column is provided in the budgets for producers to enter their own numbers.

"The profitability budget includes all direct costs plus replacement costs for machinery and cash rent cost of land," says Swenson. "The bottom line is the return to labor and management. This is the expected `payment' to the producer for the labor and managerial efforts required by the crop enterprise."

The cash flow budget shows the one-year cash flow feasibility of the crop enterprise. The net cash flow represents the cash left for family living, state and federal taxes, savings, and investment after all the cash operating expenses and 1999 land and machinery principal and interest payments have been met. The budgets assume that there are loans on 40 percent of the land and machinery investment.

Producers can contact their local office of the NDSU Extension Service for area-specific budgets. The budgets also will soon be available on the World Wide Web (http://www.ext.nodak.edu/extpubs/ecguides.htm).

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Source: Andrew Swenson (701) 231-7379

Editor: Dean Hulse (701) 231-6136