North Dakota State University Extension has updated the Crop Compare program, which is a spreadsheet designed to compare cropping alternatives.
The program uses the direct costs and yields from the 2020 projected crop budgets for nine regions of North Dakota, but producers are encouraged to enter the expected yields and input costs for their farm.
The user designates a reference crop and enters its expected market price.
Depending on the region, a broad selection of nine to 18 crops are compared. The program provides the prices for competing crops that would be necessary to provide the same return over variable costs as the reference crop.
Farmers in surrounding states can use this tool too. By selecting a region that is similar to land in adjacent states, farmers can get an idea on costs and yields for their operation.
“Producers can compare these ‘break-even’ prices to expected market prices to see which crop is most likely to compete with the reference crop,” says Andy Swenson, NDSU Extension farm management specialist. “You can put in the current futures price and current basis to get the cash price to the producer. It will automatically show for all the other crop options what price you would have to receive to get the same return over variable costs.”
It should be noted that an underlying assumption is that fixed costs, such as machinery ownership, land, and the owner’s labor and management, do not vary among crop choices and therefore do not need to be included in the analysis.
“For example, there may be additional labor, management and risk associated with a competing crop,” Swenson adds. “If all the labor and management is provided by the owner-operator, it would be considered a fixed cost and could be excluded.
However, the producer should add some cost if he or she would only want to produce the crop when an adequate reward would be received for the extra time and management required relative to the reference crop.”
A similar rationale could be used if a competing crop is considered higher risk.
NDSU Extension Farm Management Specialist- Andrew Swenson
Northern Plains Potato Growers Association
Northern Ag Network – 2020