Economics of Fall Cereal Crops

  From the September 11, 2017 Issue of Agri-News
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 One option to letting unseeded acres sit idle is to plant winter cereals such as winter wheat and fall rye. However, says an Alberta and Agriculture and Forestry (AF) specialist, before making a decision it is important to compare the potential profit from these crops to traditional cereals and oilseeds.

Using AF’s 2017 crop planning guide, this table compares the contribution margin (gross income less direct expenses) of spring wheat to winter wheat, argentine canola and field peas in the dark brown soil zone.

“The table assumes that winter wheat has a 20 per cent yield premium over spring wheat,” says Dean Dyck, farm business management specialist, AF. “The machinery and equipment costs are average custom rates. The expected market price is the AFSC (Agriculture Financial Services Corporation) crop insurance spring insurance prices. Your numbers will be different.”

The contribution margin of winter wheat compares favorably to spring wheat within a rotation, says Dyck. “Even though the price is at a discount, the yield premium makes the crop attractive.”

The economic decision whether or not to let the land sit idle depends on planting intentions and price projections. “If you intend to plant canola or field peas in the same field next year, profit potential would suggest letting the land sit idle this year and staying with those crops instead of going with winter wheat. Prices and yields for canola and field peas would have to drop substantially to make winter wheat competitive. The only additional cost would likely be chemfallow product plus application of approximately $30 per acre.

“However, if you plan on planting spring wheat in the same field next year, the decision becomes more interesting. Factoring in the additional cost of chemfallow, the contribution margin on spring wheat decreases to about $14 per acre. The decision on whether to go with a fall seeded crop depends on the yield premium of winter wheat over spring wheat in your area.”

Economics aside, Dyck says there are other risk factors to consider when growing fall seeded crops.

“On the positive side, fall seeded crops can spread out the workload on a tight workforce farm. However, they require different management techniques as compared to spring cereals, and moisture conditions in the spring will impact the ability to do necessary field work. It’s important to identify, measure and manage these risks. A great tool to help in this process is RiskChoices, available on the AF website.”

For more information, contact the Alberta Ag-Info Centre at 310-FARM (3276).

Alberta Ag-Info Centre
310-FARM (3276)

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For more information about the content of this document, contact Dean Dyck.
This document is maintained by Ken Blackley.
This information published to the web on August 17, 2017.