What is Your Yield Potential?
Establish Realistic Yield Goals
•Yield Potential of Soil
•Growing Season - Growing
Degree Units
•Sub-soil Moisture
•Management Ability and
Philosophy
•Attitude Toward Risk
•Willingness to Be Timely
Source: Lauer, 2008
NCGA (1983-2008), PEPS (1987-2008)
Highest recorded corn
yields. Records set in
2008 have bold values.
1
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
PEPS Objectives, Divisions and Districts
Objectives
• Cost analysis of grain enterprises
• Emphasize soil and water conservation,
efficiency, profitability, and
competitiveness vs. productivity alone
• Recognize the way efficient growers
integrate practices into a system through:
Districts
 PEPS Contest
 PEPS Workshops
Divisions
• Corn, Cash Crop: Corn following a legume
or non-legume grain crop (i.e. corn,
soybean, small grain, etc.) or non-legume
forage or cover crops
 No manure applied.
 A charge for drying costs assessed.
• Corn, Livestock: Corn following forage
legume or green-manure legumes (alfalfa,
red clover, etc.); and/or manure applied
on land.
 Drying costs will not be assessed.
• Corn silage
• Soybean
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
Calculating Grower Return
Partial Budget Analysis
• Corn Price per bushel
 Price matrix: $2.00, $4.00, $6.00
 grPEPS: Weighted Price per bushel =
50% November Average Cash price
+ 25% March CBOT Futures ($0.15 basis)
+ 25% July CBOT Futures ($0.10 basis)
 November Average Cash price derived from WI Ag Statistics; CBOT
Futures prices derived from closing price on first business day in
December.
• Grower return = (Yield x Price) - Input costs
- Handling ($0.02 per bushel)
- Hauling ($0.04 per bushel)
- Trucking (system rate)
- Drying (system rate per bushel-point > 15.5%)
- Storage (system rate per 30 day)
 Marketing plan: 50% sold at harvest, 25% at 4 months,
and 25% at 8 months.
• Corn Production Systems
 Livestock: drying=$0.00, trucking=$0.00, storage=$0.01
 On-farm: drying=$0.02, trucking=$0.11, storage=$0.02
 Commercial: drying=$0.04, trucking=$0.11, storage=$0.03
3
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
Pricing Corn Silage
Linn (Minnesota)
Silage value ($/T) = Base price + Starch adjustment + NDFD adjustment
• Base price = Cost of production
 $60 per DM Ton
• Starch adjustment =
(starch% – 29%) x (0.5 bu/starch) x (corn price $/bu)
 29% = average starch content of corn derived from Dairyland Labs
 0.5 bu/T = 1% change in starch content
• NDFD adjustment =
(NDFD%) x (0.6 lb milk/NDFD) x (milk price $/lb)
 0.6 lb milk = 1% NDFD derived from Allen (48-hr digestion)
4
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
Differences between the High (20%) and Low
(20%) profit groups
Cash Corn
(n=108)
Livestock Corn
(n=77)
Soybean
(n=96)
High
20%
Low
20%
High
20%
Low
20%
High
20%
Low
20%
Grain yield (bu/A)
221
172
222
165
63
46
Grain moisture (%)
18.7
20.6
18.1
22.5
12.2
12.2
Acre Cost ($/A)
$315
$313
$272
$296
$194
$195
Bushel cost ($/bu)
$1.43
$1.83
$1.09
$1.84
$3.09
$4.32
Grower return ($/A)
$204
$74
$230
$92
$220
$124
Source: Lauer (1987-2007)
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
How much does it cost to produce corn in WI?
Cost ($/A)
$450
Data derived from PEPS cash corn division
Cost ($/bu)
$4.50
Cost per bushel ($/bu) using WI average
$400
$4.00
Cost per bushel ($/bu) using PEPS average
$350
$3.50
$300
$3.00
$250
$2.50
$200
$2.00
$150
$1.50
$100
$1.00
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Source: Lauer
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
How much does it cost to produce corn in WI?
Cost ($/A)
$450
Cost ($/bu)
$4.50
Data derived from PEPS cash corn division
Cost per Acre ($/A)
Cost per bushel ($/bu) using PEPS average
$400
Cost per bushel ($/bu) using WI average
$4.00
y = 2.73x - 5157
R² = 0.51
$350
$3.50
$300
$3.00
$250
$2.50
y = -0.02x + 36
R² = 0.31
$200
$2.00
$150
$1.50
$100
$1.00
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Source: Lauer
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
$/A
$800
Corn and Soybean Cost of Production and
Grower Return
367
329
$700
Grower return
Cost per acre
369 353
364
$600
629
338
84
$500
$400
$300
298
93
426
59
326 323 333
201
149 159
329
257
434
409
143 112
351
$200
24 481
289 285
102
183
209 201
220
529
240
$100
$0
Cash corn
(n= 83)
Dairy/Livestock corn
(n= 57)
Soybean
(n= 79)
Silage corn
(n= 16)
Source: Lauer
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
Corn and Soybean Cost of Production ($/A)
District
1
3
2
5
4
Cash
corn
Livestock
corn
Soybean
(n=108)
(n=77)
(n=96)
1
$318
$250
$182
2
$311
$274
$183
3
$310
$258
$197
4
$327
$309
$210
5
$378
$353
$249
Average
$321
$276
$196
Source: Lauer (2003-2007)
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
Average corn production costs for major inputs
Cost ($/A)
$120
Data derived from PEPS cash corn division
Seed
Chemical
Equipment
$110
$100
Fertilizer
Harvesting
Land
$90
$80
$70
$60
$50
$40
$30
$20
$10
$0
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Source: Lauer
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
Number of Participants in PEPS
(n= 2173)
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
PEPS Contest Strengths and Weaknesses
• Verified yields and production
costs
 History
PEPS Contest does not account for:
• Overhead
 Usually assessed at 18 to 46 % of
production costs
 Comparative
• Since 1997, placing based on
profitability
 Examples include:
 Plowing snow
 Fixing fence
 Prior to 1997, placing based on
lowest cost per bushel
• Soil loss within tolerable “T” level
 USLE; USDA-NRCS
 Property taxes / “Real” land costs
 Equipping shop
 Alimony
 Farm pick-up
 Tiling
• Entry fee = $25, no limit to
 Desk management
number of entries
• “Best of the Best” – Low yielding
• Entry deadline = August 1
fields not usually entered
• Awards = $100 to winner for each
district/division
• Total fields evaluated = 2340
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
How can you get involved in PEPS?
• Contest versus Verification options
• Does it pay to grow corn on my farm?
Do I know my production costs?
If I do, how do I compare?
How efficient is my operation?
Am I a good steward?
If I make changes, how does that affect my bottom-line?
• What role can agents/dealers/consultants play in PEPS?
Promote among producers who would benefit (helping with forms, soil
loss and yield checks)
Encourage National Corn Growers Association yield contestants to enter
Provide input to PEPS committee from “real world”
Financial sponsorship
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy
Know Your Production Costs
Changes in Grower Return With PEPS Participation
180
Grower return ($/A)
Cash Corn = $24/A yr
Livestock Corn = $13/A yr
160
Soybean = NS
140
120
100
80
60
1
2
3
4
Year in PEPS
Source: Lauer (PEPS, 1987-2003, n= 128)
http://corn.agronomy.wisc.edu
Lauer © 1994-2008
University of Wisconsin – Agronomy