(01/26/21) BATON ROUGE, La. — Having a healthy farm economy is important on the local and national levels. To help farmers make informed choices, LSU AgCenter economists have released their latest budget planning and decision tools for the 2021 crop year.
AgCenter economist Michael Deliberto and research associate Brian Hilburn have developed a system of budgets and spreadsheets to help determine production costs of major row crops and which ones are the most economically advantageous based on market conditions.
“We survey input suppliers and we attempt to estimate average cost for seed, chemicals, fuel and fertilizer,” Deliberto said. “So we can develop representative farm samples for how much does it cost per acre to grow cotton. How much does it cost per acre to grow hybrid rice in Louisiana?”
Deliberto said the decision tools prepared by the agricultural economics department allow producers to customize their plans based on factors unique to the producers. This feature allows them to see what farm programs are most beneficial.
“We would like to provide them with as many tools and resources as we can to help them see how effective farm programs are,” he said. “How useful these budgets can be is where they can go in and put their actual information and expectations, their own prices and own production, and really model for their particular farm.”
The variability of market conditions and fluctuations of input costs can create budgeting issues for farmers. Situations not only vary from farm to farm, but conditions can vary across a farm.
“Field by field, those costs vary. Does the field have higher weed pressure? Are there fertility issues that require more nitrogen or less nitrogen? And this is where you can really see the sensitive nature of these budgets,” he said.
Fuel, fertilizer, chemicals and seed costs are the most volatile year after year, with fuel and fertilizer the most volatile.
According to Deliberto, an advantage of the budget plans is they allow producers to see the breakeven price they will need to get for their crops to cover costs.
Deliberto said the decision-making tools are not only useful for producers, but they can also be helpful for agricultural stakeholders and lenders.
Most commodity prices have been climbing higher, so making informed decisions now can reap benefits later.
“Those higher prices give producers the opportunity to pay down farm debt,” Deliberto said. “It can be used to pay down debts on land and machinery.”
The sample budgets can be found by going to lsuagcenter.com/topics/crops, then clicking on the desired commodity to see the plans.
Deliberto’s research is funded by the Louisiana Rice Research Board, Louisiana Soybean and Feed Grain Research and Promotion Board, American Sugarcane League and Cotton, Inc.
Soybean plants growing in a field in Acadia Parish. LSU AgCenter economists have released budget planning tools for all major row crops, including soybeans, for the 2021 crop year. They can be viewed at lsuagcenter.com/topics/crops. Photo by Olivia McClure/LSU AgCenter.
Sugarcane waits to be harvested from a field in West Baton Rouge Parish. LSU AgCenter economists have released budget planning tools for all major row crops, including sugarcane, for the 2021 crop year. They can be viewed at lsuagcenter.com/topics/crops. Photo provided by the LSU AgCenter.