Wednesday, January 30, 2008

Crop Profitability for 2008 Depends on Where You Farm

The 2008 projections for crop profitability are beginning to come out. 2007 was a year for the record books with a bumper corn crop combined with record prices created outstanding profitability for many farmers. Most farmers are optimistic coming into 2008 and finalizing planting decisions. But where you live in the country can drive what crop is most profitable to grow:

Swenson says northern Plains grain farmers may do even better this season,
although it could come at a cost -- specifically, at a record-high production
cost. "For 2008, the increase in costs is stunning," he warned. "Total direct cash
costs per acre will increase, on average by about 30%."

Annual crop budgets prepared by Swenson project that crops with higher
production risk and strong management requirements -- such as dry edible
beans, mustard seed and confectionary sunflowers -- would again provide the
greatest returns to North Dakota farmers in 2008, averaging over $100/acre.

Projections for 2008 made by University of Illinois extension financial
management specialist Gary Schnitkey indicate that corn will be more profitable
than soybeans in northern and central Illinois, but not in southern sections of
that top-producing state.

"Significantly higher costs for corn production may cause some farmers to
switch acres from corn to soybeans," said Schnitkey. "Planting more corn may
necessitate equipment changes that could increase costs, for example."
Barry Ward, an Ohio State University Extension economist says the cost of growing corn in his state is expected to 24%-35% higher in 2008 than in 2007,while soybean costs are projected to rise 23% -- due to much more expensive fuel, seed and fertilizer prices.

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