msu-ceco/aec_v1 · Datasets at Hugging Face

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Crop consulting, $/acre $6.50 $6.50 $6.50 $6.50
Crop insurance, $/acre $37.00 $37.00 $37.00 $37.00
Drying cost, $/acre $0.00 $0.00 $0.00 $0.00
Miscellaneous costs, $/acre $0.00 $0.00 $0.00 $0.00
Custom hire/machinery expenses, $/acre $143.79 $150.14 $143.79 $150.14 Assumes all tillage, cultural and harvesting operations.
Other non-fieldwork labor, $/acre $0.00 $0.00 $0.00 $0.00 Assumed covered by custom hire.
Irrigation labor, $/acre $6.50 $6.50 $6.50 $6.50
Irrigation amounts, inches 17 17 13 13 Assumes approximately 25% savings with SDI.
Fuel and oil for pumping, $/inch $3.75 $5.80 $3.75 $5.80 Assumes equal operating pressures at pump site.
Fuel and oil for pumping, $acre $63.75 $48.75
Irrigation maintenance and repairs, $/inch $0.60 $0.60 $0.60 $0.60
Irrigation maintenance and repairs, $/acre Suggested $10.20 $7.80
1/2 yr.
interest on variable costs, rate 7.5% 8.0% $18.72 $18.07
Total Variable Costs $517.90 $499.85 These values are suggested values on Main tab.
Figure 2.
CF worksheet of the economic comparison spreadsheet template and the current production cost variables.
Sums at the bottom of the CF worksheet are the suggested values for total variable costs on the Main worksheet.
Corn enterprise cost of production information is available from the authors and the K-State Research and Extension publication Center Pivot Irrigated Corn Cost Return Budget in Western Kansas, MF-585.
Actual values may vary from suggested values in the worksheet where current prices and market conditions warrant.
Key assumptions represented on the CF tab that are relevant to this economic analysis are listed below.
1.
Nitrogen fertilizer, $/pound of 82-0-0 = $ 0.24 /pound
2.
Phosphorus fertilizer, $/pound of 18-46-0 = $ 0.44 /pound
3.
Fuel and oil for pumping, $/acre inch = $ 3.75 /acre inch
4.
1/2 yr.
Interest on variable costs, rate = 7.5% interest
5.
Total variable costs, $/acre: CP = $517.90
6.
Total variable costs, $/acre: SDI = $499.85
Lamm, et al.
provides a further explanation of sensitivity analysis of physical production factors critical to the CP versus SDI investment decision in spreadsheet tabs on a) Field size & SDI life, b) SDI cost & life, and c) Yield & Price tabs.
Economic Factors Affecting CP versus SDI Investments
The key economic factors in this decision framework which are hypothesized to have an impact upon CP versus SDI investments include commodity prices, costs of key crop inputs, irrigation energy costs, interest rates on operating expenses, the opportunity cost of capital investments, and overall inflation in production costs.
Economic analysis typically relies upon "ceteris paribus" assumptions to determine the marginal impact of any particular factor in isolation.
The following analysis will first focus on the impacts of variability of key factors separately.
A final broader analysis will be conducted in which "low" versus "high" market product price and production cost regimes are examined to understand the systematic impact of these key factors.
This systematic perspective reflects the integrated, interdependent nature of agricultural, energy and financial markets.
Corn Price Variability Impact
Over the October 2000-December 2009 period U.S.
corn prices have exhibited great variability, with corn upfront corn futures contract prices ranging from approximately $1.90 to $7.50 per bushel.
In this analysis, CP versus SDI investment returns will be analyzed for the base budget corn price , a low price and a high price.
The low price of $1.95 per bushel represents the current U.S.
average commodity marketing loan program
price for corn.
The high price of $6.00 per bushel represents a basis-adjusted estimate of cash prices that would be typically available to crop producers at the high end of the 2000-2009 corn futures trading range.
In this analysis, higher corn prices tended to favor SDI systems, while lower corn prices tended to favor CP systems.
These results can also be derived from the Yield and Price tab of the K-State spreadsheet.
Table 1.
Corn Price Variation Impact on SDI versus CP Returns
Corn Price CP SDI SDI Less CP SDI Less CP
Scenarios Variable Variable Returns Returns
Cost
Base: $3.50 per $517.90 $499.85
Low: $1.95 per bu.
$517.90 $499.85
High: $6.00 per bu.
$517.90 $499.85 $15,624 $98
Natural Gas Pumping Cost Variability Impact
Just as for other agricultural and energy-related commodities, over the October 2000-December 2009 period U.S.
natural gas prices have exhibited great variability.
Lead contract natural gas futures contract prices have ranged from approximately $2.00 to nearly $16.00 per mcf..
In the irrigated crop enterprise budgets developed by K-State Research and Extension, natural gas is the energy source used to calculate irrigation pumping costs.
Center pivot sprinkler versus SDI investment returns will be analyzed for a base budget natural gas price of $5.53 per mcf., leading to a cost of $3.75 per acre inch of water applied for pumping-related fuel and oil.
The low natural gas price to be considered is $2.00 per mcf., leading to a cost of $1.55 per acre inch of water applied for pumping-related fuel and oil.
The high natural gas price is $12.00 per mcf., leading to a cost of $7.78 per acre inch of water applied for pumping-related fuel and oil.
Natural gas price variation does not have a large impact on net returns in this analysis, causing a variation of $2 to $3 per acre in the advantage of CP over SDI systems from the base scenario.
Table 2.
Natural Gas Price Variation Impact on SDI versus CP Returns
Natural Gas Price CP SDI SDI Less CP SDI Less CP
Scenarios Variable Variable Returns Returns
Cost
Base: $5.53 per $517.90 $499.85
$3.75 per acre inch
Low: $2.00 per $479.10 $470.17
$1.55 per acre inch
High: $12.00 / mcf.
$588.98 $554.20
$7.78 per acre inch
Nitrogen and Phosphorous Fertilizer Cost Variability Impact
Fertilizer prices for anhydrous ammonia or NH3 and diammonium phosphate or DAP have also been extremely variable in the most recent decade.
Over the 1999-2008 period U.S.
fertilizer prices have trended higher, with 82-0-0 prices ranging from $211 to $755 per ton of nitrogen on average per year.
During the summer of 2008 anhydrous ammonia prices reached over $1,050 per ton of nitrogen.
During 1999-2008 di-ammonium phosphate prices ranged from $227 to $850 per ton, reaching up to $1,200 per ton in the summer months of 2008.
Although the prices for these two fertilizer products are not perfectly correlated in real world markets, the low and high price scenarios for anhydrous ammonia and di-ammonium phosphate will be analyzed together.
The base 82-0-0 price is $0.24 per pound of nitrogen, and the base price for 18-46-0 is $0.44 per pound.
The low 82-0-0 price is $211 per ton or $0.13 per pound of nitrogen, and $0.11 per pound for 18-46-0.
The high 82-0-0 price is $950 per ton or $0.57 per pound of nitrogen, and $0.85 per pound for 18-46-0.
Figure 5.
United States Annual Average Fertilizer Prices: 1999-2008.
Source: USDA Economic Research Service
Fertilizer price variation does have some impact on net returns in this analysis, favoring SDI systems when fertilizer prices decline, and Center Pivot Irrigation systems when fertilizer prices increase.
High-low N and P fertilizer price variation in this analysis accounted for a $19 per acre change in the profitability of SDI and CP systems.
Table 3.
Fertilizer Price Variation Impact on SDI versus CP Returns

Crop consulting, $/acre $6.50 $6.50 $6.50 $6.50

Crop insurance, $/acre $37.00 $37.00 $37.00 $37.00

Drying cost, $/acre $0.00 $0.00 $0.00 $0.00

Miscellaneous costs, $/acre $0.00 $0.00 $0.00 $0.00

Custom hire/machinery expenses, $/acre $143.79 $150.14 $143.79 $150.14 Assumes all tillage, cultural and harvesting operations.

Other non-fieldwork labor, $/acre $0.00 $0.00 $0.00 $0.00 Assumed covered by custom hire.

Irrigation labor, $/acre $6.50 $6.50 $6.50 $6.50

Irrigation amounts, inches 17 17 13 13 Assumes approximately 25% savings with SDI.

Fuel and oil for pumping, $/inch $3.75 $5.80 $3.75 $5.80 Assumes equal operating pressures at pump site.

Fuel and oil for pumping, $acre $63.75 $48.75

Irrigation maintenance and repairs, $/inch $0.60 $0.60 $0.60 $0.60

Irrigation maintenance and repairs, $/acre Suggested $10.20 $7.80

1/2 yr.

interest on variable costs, rate 7.5% 8.0% $18.72 $18.07

Total Variable Costs $517.90 $499.85 These values are suggested values on Main tab.

Figure 2.

CF worksheet of the economic comparison spreadsheet template and the current production cost variables.

Sums at the bottom of the CF worksheet are the suggested values for total variable costs on the Main worksheet.

Corn enterprise cost of production information is available from the authors and the K-State Research and Extension publication Center Pivot Irrigated Corn Cost Return Budget in Western Kansas, MF-585.

Actual values may vary from suggested values in the worksheet where current prices and market conditions warrant.

Key assumptions represented on the CF tab that are relevant to this economic analysis are listed below.

1.

Nitrogen fertilizer, $/pound of 82-0-0 = $ 0.24 /pound

2.

Phosphorus fertilizer, $/pound of 18-46-0 = $ 0.44 /pound

3.

Fuel and oil for pumping, $/acre inch = $ 3.75 /acre inch

4.

1/2 yr.

Interest on variable costs, rate = 7.5% interest

5.

Total variable costs, $/acre: CP = $517.90

6.

Total variable costs, $/acre: SDI = $499.85

Lamm, et al.

provides a further explanation of sensitivity analysis of physical production factors critical to the CP versus SDI investment decision in spreadsheet tabs on a) Field size & SDI life, b) SDI cost & life, and c) Yield & Price tabs.

Economic Factors Affecting CP versus SDI Investments

The key economic factors in this decision framework which are hypothesized to have an impact upon CP versus SDI investments include commodity prices, costs of key crop inputs, irrigation energy costs, interest rates on operating expenses, the opportunity cost of capital investments, and overall inflation in production costs.

Economic analysis typically relies upon "ceteris paribus" assumptions to determine the marginal impact of any particular factor in isolation.

The following analysis will first focus on the impacts of variability of key factors separately.

A final broader analysis will be conducted in which "low" versus "high" market product price and production cost regimes are examined to understand the systematic impact of these key factors.

This systematic perspective reflects the integrated, interdependent nature of agricultural, energy and financial markets.

Corn Price Variability Impact

Over the October 2000-December 2009 period U.S.

corn prices have exhibited great variability, with corn upfront corn futures contract prices ranging from approximately $1.90 to $7.50 per bushel.

In this analysis, CP versus SDI investment returns will be analyzed for the base budget corn price , a low price and a high price.

The low price of $1.95 per bushel represents the current U.S.

average commodity marketing loan program

price for corn.

The high price of $6.00 per bushel represents a basis-adjusted estimate of cash prices that would be typically available to crop producers at the high end of the 2000-2009 corn futures trading range.

In this analysis, higher corn prices tended to favor SDI systems, while lower corn prices tended to favor CP systems.

These results can also be derived from the Yield and Price tab of the K-State spreadsheet.

Table 1.

Corn Price Variation Impact on SDI versus CP Returns

Corn Price CP SDI SDI Less CP SDI Less CP

Scenarios Variable Variable Returns Returns

Cost

Base: $3.50 per $517.90 $499.85

Low: $1.95 per bu.

$517.90 $499.85

High: $6.00 per bu.

$517.90 $499.85 $15,624 $98

Natural Gas Pumping Cost Variability Impact

Just as for other agricultural and energy-related commodities, over the October 2000-December 2009 period U.S.

natural gas prices have exhibited great variability.

Lead contract natural gas futures contract prices have ranged from approximately $2.00 to nearly $16.00 per mcf..

In the irrigated crop enterprise budgets developed by K-State Research and Extension, natural gas is the energy source used to calculate irrigation pumping costs.

Center pivot sprinkler versus SDI investment returns will be analyzed for a base budget natural gas price of $5.53 per mcf., leading to a cost of $3.75 per acre inch of water applied for pumping-related fuel and oil.

The low natural gas price to be considered is $2.00 per mcf., leading to a cost of $1.55 per acre inch of water applied for pumping-related fuel and oil.

The high natural gas price is $12.00 per mcf., leading to a cost of $7.78 per acre inch of water applied for pumping-related fuel and oil.

Natural gas price variation does not have a large impact on net returns in this analysis, causing a variation of $2 to $3 per acre in the advantage of CP over SDI systems from the base scenario.

Table 2.

Natural Gas Price Variation Impact on SDI versus CP Returns

Natural Gas Price CP SDI SDI Less CP SDI Less CP

Scenarios Variable Variable Returns Returns

Cost

Base: $5.53 per $517.90 $499.85

$3.75 per acre inch

Low: $2.00 per $479.10 $470.17

$1.55 per acre inch

High: $12.00 / mcf.

$588.98 $554.20

$7.78 per acre inch

Nitrogen and Phosphorous Fertilizer Cost Variability Impact

Fertilizer prices for anhydrous ammonia or NH3 and diammonium phosphate or DAP have also been extremely variable in the most recent decade.

Over the 1999-2008 period U.S.

fertilizer prices have trended higher, with 82-0-0 prices ranging from $211 to $755 per ton of nitrogen on average per year.

During the summer of 2008 anhydrous ammonia prices reached over $1,050 per ton of nitrogen.

During 1999-2008 di-ammonium phosphate prices ranged from $227 to $850 per ton, reaching up to $1,200 per ton in the summer months of 2008.

Although the prices for these two fertilizer products are not perfectly correlated in real world markets, the low and high price scenarios for anhydrous ammonia and di-ammonium phosphate will be analyzed together.

The base 82-0-0 price is $0.24 per pound of nitrogen, and the base price for 18-46-0 is $0.44 per pound.

The low 82-0-0 price is $211 per ton or $0.13 per pound of nitrogen, and $0.11 per pound for 18-46-0.

The high 82-0-0 price is $950 per ton or $0.57 per pound of nitrogen, and $0.85 per pound for 18-46-0.

Figure 5.

United States Annual Average Fertilizer Prices: 1999-2008.

Source: USDA Economic Research Service

Fertilizer price variation does have some impact on net returns in this analysis, favoring SDI systems when fertilizer prices decline, and Center Pivot Irrigation systems when fertilizer prices increase.

High-low N and P fertilizer price variation in this analysis accounted for a $19 per acre change in the profitability of SDI and CP systems.

Table 3.

Fertilizer Price Variation Impact on SDI versus CP Returns