Livestock, crop income shows greater balance in '08 than '07
Income from crop and livestock operations showed greater balance in 2008 than 2007, says a seasonal report created and shared by area farmers. Livestock programs, while not uniformly profitable in 2008, accounted for 45.4 percent of the operating...
Income from crop and livestock operations showed greater balance in 2008 than 2007, says a seasonal report created and shared by area farmers.
Livestock programs, while not uniformly profitable in 2008, accounted for 45.4 percent of the operating income of the 90 farms enrolled in Mitchell Technical Institute's farm management program.
Crop sales accounted for 43.9 percent of cash operating income, said Roger DeRouchey, an instructor with the popular longtime program.
In 2007 livestock provided 51 percent of income, and crops 37.5 percent of income. The difference between the two income streams was even greater in 2006, which saw livestock providing 51.5 percent of income and crop sales 32 percent.
"Good crop yields and higher crop prices, average beef and hog prices, and strong milk prices in 2008 helped to balance livestock and crop income," explained DeRouchey.
The remainder of farm income in both years was derived from government payments, off-farm income and other, less significant, income streams.
Government payments made up 3.3 percent of farm income in 2008 and 3 percent in 2007 because high crop prices reduced loan deficiency payments, said DeRouchey. With 2006's poorer crop yields, government payments comprised 5.2 percent of farm income.
Winter wheat was the clear winner for profitability in 2008, said farm program co-instructor Calvin Pietz.
"In 24 years of instructing, I've never seen the wheat prices this good," he said.
The following table shows the per-acre income on 2008's most profitable crops, arranged in a descending order of profitability, followed by the production cost per acre (land costs included), and the average profit per acre:
- Winter wheat: total return, $560.02; total costs, $245.05; profit, $314.97.
- Corn for grain: total return, $496.52; total costs, $361.72; profit, $134.80.
- Oats: total return, $293.91; total costs, $184.39; profit, $109.52.
- Spring wheat: total return, $386.65; total costs, $278.14; profit, $108.51.
- Alfalfa hay: total return, $289.58; total costs, $194.37; profit, $95.21.
- Soybeans: total return, $341.52; total costs: 247.03; profit, $94.49.
Corn accounted for 16.9 percent of farm income in 2008, 11.2 percent of income in 2007 and 11.5 percent in 2006. Soybeans comprised 16.1 percent of income in 2008, 14.9 percent in 2007, and 10.1 percent in 2006.
Many producers shifted to a balance between corn and soybeans in 2008, most likely due to lower input costs for the latter, said DeRouchey.
"Profitability depends on consistent high yields, price received and low total production costs," DeRouchey said.
In 2008, soybean yields were down due to poor weather conditions, averaging 32.2 bushels per acre compared to 44.8 bushels per acre in 2007 and 38.3 bushels per acre in 2006.
Corn averaged 127.6 bushels per acre, which was up from 2007 yields of 112.7 bushels per acre, and dramatically better than 2006's yields of 81.6 bushels per acre.
Figuring an average price of $3.50 a bushel for corn, the average 2008 farm in the MTI program needed yields of 105 bushels per acre simply to break even, said DeRouchey.