2014 Purdue Crop Cost and Return Guide (August 2013)

Craig DobbinsMichael LangemeierAlan Miller

Outline of Presentation

• Trends in Revenue, Variable Cost, and Contribution Margin

• 2013 and 2014 Comparisons– Market Revenue– Variable Cost– Contribution Margin– Earnings

• Earnings per Acre, 2005 to 2014

Trends in Market Revenue, Variable Cost,and Contribution Margin

2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

100

200

300

400

500

600

700

800

900

1000

Rotation Corn (Average Productivity Soil)Market Revenue Variable Costs Contribution Margin

Dollars per Acre

2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

100

200

300

400

500

600

700

800

Rotation Soybeans (Average Productivity Soil)Market Revenue Variable Costs Contribution Margin

Dollars per Acre

2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

100

200

300

400

500

600

700

800

Wheat (Average Productivity Soil)Market Revenue Variable Costs Contribution Margin

Dollars per Acre

Ten-Year Averages (2005 to 2014)

Crop MR VC CM

Continuous Corn

Rotation Corn

Rotation Soybeans

Wheat

Double-Crop Soybeans

638

683

497

404

314

376

354

186

162

156

263

328

311

241

158

2013 and 2014 Comparisons

Market Revenue per Acre(Average Productivity Soil)Crop 2013 2014 % Change

Continuous Corn

Rotation Corn

Rotation Soybeans

Wheat

Double-Crop Soybeans

887

945

670

574

471

719

766

626

441

441

-18.9

-18.9

-6.5

-23.2

-6.5

Variable Cost per Acre(Average Productivity Soil)Crop 2013 2014 % Change

Continuous Corn

Rotation Corn

Rotation Soybeans

Wheat

Double-Crop Soybeans

486

462

239

204

205

451

431

229

186

197

-7.2

-6.7

-4.2

-8.8

-3.9

Variable Cost per Acre(Average Productivity Soil)Rotation Corn 2013 2014 % Change

Fertilizer

Seed

Pesticides

Fuel

Other

176

115

38

49

84

138

122

38

50

83

-21.6

6.1

0.0

2.0

-1.2

Variable Cost per Acre(Average Productivity Soil)Rotation Soybeans 2013 2014 % Change

Fertilizer

Seed

Pesticides

Fuel

Other

77

69

24

16

53

62

73

25

16

53

-19.5

5.8

4.2

0.0

0.0

Contribution Margin per Acre(Average Productivity Soil)Crop 2013 2014 % Change

Continuous Corn

Rotation Corn

Rotation Soybeans

Wheat

Double-Crop Soybeans

401

483

431

370

266

268

335

397

255

244

-33.2

-30.6

-7.9

-31.1

-8.3

2014 Contribution Margin per Acre by Soil Productivity LevelCrop Low Average High

Continuous Corn

Rotation Corn

Rotation Soybeans

Wheat

Double-Crop Soybeans

164

221

283

189

161

269

335

397

255

244

403

477

512

323

327

Land Rent in Dollars per Bushel of Corn YieldLand Quality 2013 2014

Low Yield 1.25 1.37

Average Yield 1.30 1.43

High Yield 1.37 1.52

Note: Based on 2013 Purdue Land Value Survey. These are not forecasted amounts.

Rotations

• Continuous Corn• Corn/Soybean• Corn/Soybean/Corn/Wheat– 50.0% corn– 33.3% soybeans– 16.7% wheat; double-crop soybeans

2013 and 2014 Earnings per Acre(Average Productivity Soil)Rotation 2013 2014

Continuous Corn

Corn/Soybean

Corn/Soybean/Corn/Wheat; DC Soybeans

50

120

154

-105

7

24

2013 and 2014 Total Costs Per Bushel (Corn/Soybean Rotation; 3000 acres)

Crop

Low Yield Average Yield High Yield

$/Bushel $/Bushel $/Bushel

2013 2014 2013 2014 2013 2014

Rotation Corn 5.45 5.34 4.90 4.85 4.44 4.43

Rotation Beans 11.88 12.09 10.67 10.89 9.98 10.25

Earnings per Acre, 2005 to 2014

Ten-Year Earnings per Acre(Average Productivity Soil)Rotation Average Standard

Deviation CV

Continuous Corn

Corn/Soybean

Corn/Soybean/Corn/Wheat; DC Soybeans

-7.45

61.03

79.52

107.55

107.00

111.15

175.32

139.77

Questions, Comments