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Title: ANALYSIS OF THE PROFITABILITY OF PRODUCTION BASED ON YIELD MAPS

Author
item WILD, DEREK
item Colvin, Thomas

Submitted to: International Conference on Precision Agriculture Abstracts & Proceedings
Publication Type: Proceedings
Publication Acceptance Date: 7/14/2002
Publication Date: 7/17/2002
Citation: WILD, D., COLVIN, T.S. ANALYSIS OF THE PROFITABILITY OF PRODUCTION BASED ON YIELD MAPS. INTERNATIONAL CONFERENCE ON PRECISION AGRICULTURE ABSTRACTS & PROCEEDINGS. 2002. CD-ROM. MADISON, WI.

Interpretive Summary: Managing a business for profit suggests that each asset, process, or segment of production be examined to determined if it is producing a profit. In crop production, one of the most important assets is land. This project used crop yield records obtained with a yield monitor over several years to determine the profit producing status of all the fields in a commercial sized crop production farm in central Iowa. Variability of yields/profits were determined on a whole field basis as well as on segments within fields to see if fields with more variability tended to be more or less profitable on the whole. It was determined that all fields were producing enough sales to cover their variable costs [seed, fertilizer, herbicides, etc] but not enough sales to cover all costs including land. This was also true when an increase of 10% in costs was calculated. This suggests that these fields should all remain in production in the short run but are not profitable in the long run with the assumptions that were made for input costs and crop prices. This information could be used to focus production on the most profitable fields with the possibility of dropping less profitable fields from this farming operation. Generally this approach might be used to attempt to increase the profitability of crop production on any farm where similar records are available.

Technical Abstract: Profitability is the key factor in determining the feasibility of production. It is based on the simple relationship between revenue and cost. To explore this relationship in production agriculture, three years of yield monitor data were obtained from fields in a non-irrigated corn-soybean rotation. Mean yields for the fields were determined on a whole field basis as well as on a 2.5-acre grid basis. Current estimated costs of production and recent average market prices were taken into consideration, and the yields were categorized by profitability. The fields examined in this study are profitable in the short-run, but may not be in the long-run unless market prices improve or costs of production decrease.