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Prairie Farmer - January 2008

Figure Rotations

Garrett Stoerger
Department of Agricultural and Consumer Economics
University of Illinois at Urbana-Champaign

When you begin to make planting decisions for the year to come, you have several factors to consider: commodity prices, input costs, last year's rotation decisions and, of course, where you expect the market to go.

Without too much effort, you could work through these numbers yourself. However, there is an even easier way. The University of Illinois farmdoc team has a FAST spreadsheet that will help you determine the most profitable rotation for your farm given your estimated yield, commodity prices and input costs. Considering the recent and future potential spikes in input costs, now may be a prime time to run the numbers on a corn-bean rotation.

The Crop Rotation tool is essentially two tools in one. It begins with the basics of the crop budgeting tool: revenue from crops and government payments, as well as all costs.

Default budgets are available for four geographic regions, and these budgets reflect what University of Illinois experts forecast as 2008 levels. Using these numbers as a starting point, you can modify any one of the categories on the budget to fit your own operation.

Tool runs the numbers

After you have made your changes to the budget, the model is ready to run. The first place to direct your attention would be the Rotation Returns section just to the right of the budget. This section will calculate the returns for three different types of rotations:

• half corn, half soybeans
• two-thirds corn, one-third beans (two years of corn, one year of beans)
• continuous corn

The rotation with the highest return will appear with a box around its value, indicating it is preferred to the other two rotations. In some instances, there may only be a few dollars separating the most profitable rotation from the least profitable. On the contrary, when corn and soybean prices begin to fluctuate in different directions, one rotation can quickly emerge as the most profitable by a large margin.

If you like to see information in a graphical form, you're in luck. The second feature that the Crop Rotation tool has is the chart seen here, which illustrates the point at which one crop rotation is more profitable than another given corn and soybean prices.

The circular points that appear on the chart with vertical and horizontal lines represent your breakeven. When using a corn price of $3.75, we can see the corresponding soybean price level at which there is no distinction between the rotation alternatives. As an added feature, a table below the chart will allow the user to define the price of corn, as well as view sensitivity for a range of other prices.

If you are contemplating the most profitable crop rotation on your farm, take a few minutes and check out what the farmdoc Web site has to offer. With very little effort, you can successfully examine the rotation that is optimal on your farm by defining three basic items: yield, price and input costs.

Stoerger is FAST coordinator with University of Illinois Extension .