What is in this article?:
- Peanuts lead in Georgia‚Äôs 2014 crop budgets
- Returns shown above variable cost and not profits
- University of Georgia crop enterprise budgets show peanuts leading the way in terms of returns returns above variable costs.
- Growers should plug in their own numbers to get a more accurate view of which crops will perform best in their operations.
DESPITE A CONTINUING excess in supply, peanuts came out on top for 2014 in terms of returns above variable costs, according to the University of Georgia’s crop enterprise budgets.
Returns shown above variable cost and not profits
He encourages growers to plug their own numbers into crop enterprise budgets, keeping in mind that the returns shown are above variable costs and not profits. It does not include fixed costs or land rents.
“For dryland budgets, we raised the expected yield from peanuts to 3,400 pounds per acre and 750 pounds for cotton. So peanuts look a little better even at our expected prices,” he says.
Expected yields for dryland corn, according to the budgets, is 85 bushels per acre while grain sorghum is 65 bushels and soybeans are 30 bushels per acre.
To equal the return on peanuts, says Smith, you would need above 80 cents on non-irrigated cotton and at least 76 cents on irrigated cotton, using the expected yields in the budgets.
“So if we see the cotton market improving a little bit, at 78 to 80 cents, peanut contracts, hopefully, would improve. For corn, we’d basically need to be above $5 per bushel to be equal at those yields. For soybeans, only irrigated would be competitive considering where prices are right now. You’d need $11.50 per bushel to equal $440 on peanuts,” he says.
Looking at acres for this spring, Smith says University of Georgia economists believe the state’s cotton crop will drop some or stay close to the same as in 2013.
“I feel like we’ll drop below 400,000 acres with corn, so I’m estimating 385,000 acres,” says Smith. “We’ll probably be up by about 15 percent in peanuts, about the same on grain sorghum, up some in soybeans, at about 13,000 acres in tobacco, and growers reported about 270,000 acres of wheat plantings. We’d probably have more soybeans coming in if we had more wheat acres planted.”
Smith stresses that the UGA budget estimates are intended only as a guideline, as individual operations and local input prices vary across the state. Growers are encouraged to enter their own numbers into the budgets to determine their expected costs and returns.
“Given these expected prices and costs, peanuts look to be the highest return above variable costs for 2014. The main reason is the increase in yield expectations. However, prices for cotton, corn and soybeans have been in a downtrend and are looking for the bottom. Where they are at planting time may be different. Actual returns would change as price, yield and cost changes.
Links for the 2014 UGA Crop Budgets and the 2014 Crop Comparison Tool are:
http://www.caes.uga.edu/?tiny=OP73LP (Microsoft Excel 2010 or earlier).
http://www.caes.uga.edu/?tiny=LQ28IA (Microsoft Excel 2003 or earlier).
http://www.caes.uga.edu/?tiny=3BABD3 (Crop Comparison Tool ).