Economic Returns to Canola Rotations in Eastern...
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Economic Returns to Canola Rotations in Eastern Washington
Transcript of Economic Returns to Canola Rotations in Eastern...
Economic Returns to Canola Rotations in Eastern Washington
Objectives and Accomplishments
To develop user-friendly enterprise budgets specific to growing regions in Washington State that account for canola’s rotational impacts and to make the budget tools available to growers, researchers, agricultural industry members, and others.
low rainfall (Region 2) intermediate rainfall (Region 2) high rainfall (Region 1) irrigated (Region 3)
Enterprise budget tools for assessing costs, returns, and rotational impacts
of canola in Eastern Washington
A visual guide to using the budgets
Jenny R. Connolly, and Dr. Vicki McCracken1, and Dr. Kate Painter2
1School of Economic Sciences, Washington State University 2Dept. of Agricultural Economics and Rural Sociology, University of Idaho
Purpose of Budgets Tools
-> To compare returns between rotations with and without canola, accounting for canola’s rotational impacts.
• User-friendly Excel enterprise budgets specific to growing regions in Washington State
• Budgets account for canola’s rotational impacts (chemical and tillage differences, yield impacts on wheat)
• For use by growers, researchers, agricultural industry members, and others
Budget Features (red indicates interactive tabs)
• Tabs in Budget Workbook (Excel) :• Title Page• Assumptions and Instructions• Summary (of returns)• Input Costs• Calendars
• Crop budget sheets (crops in rotation with canola are separated out)
• Machinery complement• Machinery costs
Using and Adapting the Budgets
1. Review the Instructions & Assumptions tab, the Calendar tabs, and the Machinery Complement tab to understand what assumptions were made about farm size, machinery operations, inputs, etc. in the default budget scenarios.
Default budget scenarios are based on grower interviews and expert input
• yields, calendars and types of operations, machinery size, chemical rates, etc.
2. Modify the yield and price values in red text on the Summary tab. Choose rotations for comparison from the drop down menu in Table 2 on the Summary tab.
Example of rotation options in Low Rainfall Zone budgets:
Traditional rotations• F—HRWW—F—SWWW• F—SWWW—F—SWWW• F—HRWW—F—HRWW
Canola rotations• F—WC—F—SWWW• F—WC—F—HRWW
F= fallow
HRWW= hard red winter wheat
SWWW= soft white winter wheat
WC= Winter canola
3. Modify inputs, rates, and various costs on the budget sheet for each crop in the rotations being compared. Input prices can be updated on the Input Cost tab or directly on the individual crop budget sheet. Machinery operation costs can be updated on the Machinery Cost tab…
• Input costs based on University of Idaho’s annual Idaho Crop Input Price Summary
Summary Tab: Crop and Rotation Returns
• Interpreting results: Variable Costs (VC) + Fixed Costs (FC) = Total Costs (TC)
• Variable costs include annual operating costs like fertilizer, seed, etc. Fixed costs include ownership costs like depreciation, insurance, etc.
• Positive returns over variable costs (Revenue - VC) indicate short-term profitability while positive returns over total costs (Revenue -VC - FC) indicate long-term profitability. Returns vary based on price, yield, and cost values entered into the budget.
Summary•Inclusion of canola into crop rotations may offer agronomic benefits to farms that translate into improved overall farm profitability over time.
•Our research – Finds favorable economic returns of selected crop rotations that incorporate canola as compared to returns of traditional crop rotations appropriate to each region when rotational impacts are considered, based on scenarios considered.
Demonstration of Impacts of Canola on System with F-SWWW-F-SWWW vs. F-C-F-SWWW (canola) (through wheat Yield increases)*
Canola Rotation Yield for Soft White Winter Wheat
Whe
at R
otat
ion
Yiel
d fo
r SW
WW
45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60
45 1 2 4 6 7 10 12 13 15 17 19 21 23 24 26 28
46 -2 -1 1 3 4 7 9 10 12 14 16 18 20 21 23 25
47 -6 -5 -3 -1 0 3 5 6 8 10 12 14 16 17 19 21
48 -10 -9 -7 -5 -4 -1 1 2 4 6 8 10 12 13 15 17
49 -13 -12 -10 -8 -7 -4 -2 -1 1 3 5 7 9 10 12 14
50 -18 -17 -15 -13 -12 -9 -7 -6 -4 -2 0 2 4 5 7 9
51 -22 -21 -19 -17 -16 -13 -11 -10 -8 -6 -4 -2 0 1 3 5
52 -25 -24 -22 -20 -19 -16 -14 -13 -11 -9 -7 -5 -3 -2 0 2
53 -28 -27 -25 -23 -22 -19 -17 -16 -14 -12 -10 -8 -6 -5 -3 -1
54 -32 -31 -29 -27 -26 -23 -21 -20 -18 -16 -14 -12 -10 -9 -7 -5
55 -35 -34 -32 -30 -29 -26 -24 -23 -21 -19 -17 -15 -13 -12 -10 -8
Returns over total costs for canola rotation minus returns over total costs for wheat rotation - Positive values indicate canola rotation outperforms wheat rotation
Price Trends for Oilseeds and Cereals, 1940 – 2009
Prices – 2000 to 2013
Canola
Soybeans
Wheat
510
1520
25Pr
ice
2000 2005 2010 2015Year
Price Trends- 2000 to 2013
Returns over Costs varying Canola Price only for Region 2 (<12 inches)
Summary
• Budgets provide another tool to growers and advisors to growers to evaluate profitability of canola in traditional rotations
• Budgets account for additional rotational benefits and costs (which are ignored when looking at a single year costs/returns)
• Budgets provide detailed, interactive scenarios that can be adjusted to specific farm situations, that are hopefully easy to use!
Rotations in Region 1 and 3 suggested by growers
