Today we take a look at Texas A&M AgriLife Budgets in the Crop Profitability Analyzer. We’re a bit later in the week in order to highlight a new report out of AFPC focusing on fertilizer prices, which we’ll discuss along with changes in custom service rates, chemicals, and more.
Dates and Deadlines
1/13/2022 – WASDE
1/18/2022 – Pioneer Producer’s Meeting, Panhandle
1/19/2022 – Pioneer Producer’s Meeting, Hereford
1/20/2022 – Pioneer Producer’s Meeting, Muleshoe
1/21/2022 – Pioneer Producer’s Meeting, Plainview
1/13, 1/24, 2/23, 3/9/2022 – North Region Production Education Online
1/19 – 1/20/2022 – Red River Crops Conference
1/26/2022 – Organic Cotton and Peanut Production Seminar. Seminole, Tx.
1/27/2022 – Rolling Plains Chemical Conference. Dickens, Tx.
1/25, 1/26, 1/27, 2/9, 2/10, 2/23, 2/24, 3/9, 3/10/2021 – Amarillo Master Marketer, Amarillo
1/28/2022 – High Plains Cotton Conference, Spearman
1/31/2022 – Livestock Forage Program (LFP) Application Deadline
1/31/2022 – Cattle Inventory Report
2/1-2/3/2022 – National Cattleman’s Beef Association National Meeting, Houston
What We’re Reading
AgriLife Extension Master Marketer program slated for Amarillo – AgriLife Today
AgriLife Extension’s North Region offers production education online – AgriLife Today
New analysis has farmers concerned about looming tariffs on fertilizers – Morning Ag Clips
Economic Impact of Higher Fertilizer Prices on AFPC’s Representative Crop Farms – Agricultural & Food Policy Center
Input prices will squeeze margins in 2022 – Southwest Farm Press
District 1 Crop Profitability Analyzer
The 2022 budgets for AgriLife District 1 are complete and have been uploaded into the Crop Profitability Analyzer, which you can find at amarillo.tamu.edu. We expect the PDF versions of these budgets to be uploaded to the Extension Agricultural Economics page in the near future, but in the meantime, you can use the Analyzer to review forecast prices of crop prices and input prices.
The crop profitability analyzer has additional functions that are beneficial to producers when making planting choices. Embedded, you’ll find a crop comparison tool, a breakeven analysis tool, and an irrigation analysis tool. Each of these sheets provides context that is important in the decision making process in a complex production environment like the one we face in 2022.
Changes in Input Prices
At the risk of repeating every agricultural publication I’ve read over the last six months, input prices are skyrocketing. Not only that, finding certain inputs has become a challenge depending on where you’re located.
Most of the concern centers around fertilizer and chemical at the moment, though if natural gas remains at current levels irrigation cost will certainly be a concern later in the year. Let’s take a look at the change in costs for our District 1 Sprinkler Irrigated Corn Budget. The expected total cost of fertilization (product and application) is $198.44/acre, 47% higher year over year, but more than 200% higher over two years ago. Where the cost of fertilization historically represented about 17% of the irrigated corn budget, it now represents about 25% of the corn budget. The Agricultural and Food Policy Center released a report yesterday on the impact of these higher fertilizer prices to corn farmers.
That inflation of fertilizer costs as a portion of total costs is masked slightly by the increase in the cost of other inputs. For example, all custom rate applications, which includes fertilizer application, are expected to jump 17% year over year due to the increased cost of labor and fuel. Similarly the cost of irrigation fuel is forecast to jump 17% by summer due to the rising cost of energy. Finally, though data on chemical prices are hard to come by, anecdotal reports led us to double the expected cost of chemical, if it is even available.
The cost of inputs this year means that our typical marginal analysis will become even more important than normal. What does $1.00 of N provide, in terms of yield? Where is the breakeven point on application? Can you better use that $1.00 on irrigation fuel? What is the breakeven point between two inputs? To answer these questions, we’ll be focusing several blogs this spring and summer on timely input applications and the cost/benefit analysis of each. Expect to see discussions around seeding rates, fertilization, and irrigation application throughout the year.
Regional Forecast of Profit
Finally, our budgets include estimations of profit for a variety of crops and cattle enterprises representative of Texas High Plains production systems. Increased input prices will, without a doubt, create a squeeze on profits. However, even with standard input applications, it appears that profits are out there in 2022.
The table below shows our expectations for price, revenue, total costs, and profits. Surprisingly, in many cases our expectations for profits are higher this year than they were at the time we published budgets last year; a result of a runup in crop prices after we published budgets in late 2020.
Forecasts for Select Crops, 2022 (For educational purposes only. Not to be used without updating.)
With a bit of strategic budgeting and input management, it is even possible that producers could see profit on crops that are on the margin. If you have questions about other input strategies, or need help using the Crop Profitability Analyzer, please feel free to reach out to Pancho and myself at firstname.lastname@example.org or email@example.com.