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Knowing production costs is important

Calculating your costs to produce grain is an important part of marketing

Having a good handle on the production and marketing side of their south Saskatchewan farm is obviously important, but Jake Leguee says one of the most useful tools in overall management is knowing their breakeven point.

The Leguees keep close tabs on their inputs and returns per acre for each crop. While they obviously target optimum yields and the best price opportunities, if crop quality takes a hit or a market weakens, knowing their breakeven point helps to still keep a profit in sight.

“We spend a lot of time planning to grow the most profitable crops where they are most productive,” says Leguee, who along with his parents, Russ and Sharon, and older sister Sarah, operates a 12,000 acre, grain, oilseed and pulse crop farm between Filmore and Weyburn. “It is disappointing to have down graded wheat due to fusarium head blight, for example, but if you know your cost of production and breakeven point for that crop, then perhaps you can still find a market that is going to earn you a profit.”

Leguee and his wife Stephanie are third generation on the family farm. It was a mixed farming operation for many years, but the cattle were sold in 2009. Today the three-family farm focuses on producing canola, durum wheat, peas, lentils, soybeans, flax and winter wheat.

The Leguees have paid particular attention to the cost and returns per acre for the past five years. The first step in planning, along with keeping a proper rotation in mind, is to select crops with the most market potential. And the next is to plan that production on fields best suited to a particular crop.

For example, they’ve decided not to grow any spring wheat in 2015. Disease is an issue and the market just isn’t favouring wheat this year. They do have 2,000 acres of winter wheat in the ground. It worked well for them during the 2013-14 growing season, so planted it again last fall. Red lentils can produce a good return, but with successive years of excess moisture during the growing season, Leguee is careful to select fields with higher ground, better suited to the crop.

They’ve just started to work with soybeans. It is a crop that can handle the moisture and with lower inputs “is one of the easiest crops to grow,” says Leguee, but at the same time yields haven’t been what they’ve expected. They’ll keep trying them, but Leguee is looking forward to the development of earlier maturing (lower heat unit) varieties.

The farm follows a direct seeding, minimum tillage approach to crop production. In areas with heavy cereal crop stubble they make one pass with a Salford vertical tillage tool in the fall, which does little soil disturbance, but does help to breakdown crop residue. In the spring they apply a pre-seeding glyphosate treatment, and depending on the weed mix and the field it may be tank mixed with other herbicides for specific weed control.

With their fertility program they follow soil test recommendations to determine fertilizer rates. They are beginning to work with variable rate fertilizer technology (VRT) application in order to be more efficient with fertilizer inputs. With both deeded and rented land, they so far have developed VRT for about 20 per cent of their own land.

“We have a lot of solenetzic soils which has a limit in yield potential,” says Leguee. “And generally there can be a lot of soil variability over the acres we farm.”

Variable rate technology

Working with private agronomist Marilyn Kot of Green Acres Tech at Frances, Sask., they have developed VRT prescriptions. On selected fields, mapped out with up to five different production zones, they apply about 80 per cent of the recommended fertilizer rate at time of seeding. And then as the growing season progresses they use VRT to top up with liquid fertilizer.

“We have been working with this for a couple years and are still in the experimental stage,” says Leguee. “We may take it to the whole farm, but we want to evaluate it further. The whole idea is to try and optimize inputs and hopefully increase yields.”

Small-seeded crops such as canola and flax are seeded with a SeedMaster seeding system, while cereals and pulse crops are seeded with a John Deere hoe drill. On-board monitors keep track of fertilizer and crop seeding rates and those figures are later compared with the amounts actually bought.

“We maintain good records for the whole farm which gives us a very good picture of the actual input cost per acre for each crop seeded,” he says. At the end of the season they collect yield data from combine monitors and also compare that to the new crop inventory stored in grain bins or grain bags.

Reviewing their costs and yields per acre per crop along with market outlooks helps them determine their seeding plan for the coming year. “We spend a lot of time deciding which crops to grow on which fields for the best return,” says Leguee. “We identify those areas where crops will or won’t work and probably drop those crops that are the least profitable per acre.”

Crop planning also has to include good agronomic practices. Particularly with increasing disease pressure often fostered by wet and humid growing season conditions, the plan has to consider proper crop rotation. Fusarium head blight in wheat, blackleg and sclerotinia in canola, sclerotinia in lentils and root rots in peas can all be a factor depending on growing season conditions. Fungicides are used as needed.

“We try to follow a proper crop rotation to reduce the risk of disease development,” says Leguee. “And we also work with an outside agronomist who helps us with fertilizer recommendations, field scouting and herbicide selection. Rotation and crop diversity is important to minimize disease risk. We aim to have a timely application of herbicides and follow a proper rotation with those products, and so far we have been able to avoid any herbicide resistance issues.

The plan ahead for the farm is just more fine-tuning, says Leguee. “We have the land base to support three households, so we are not looking to grow more acres, but to grow production on the acres we have. We need to properly manage the agronomic side to optimize yields, and then make good marketing decisions, to maximize returns. We need to manage cash flow to make the farm business as financially solid as possible — it is about managing crops for more profitability.”

About the author

Field Editor

Lee Hart

Lee Hart is editor of Cattleman’s Corner based in Calgary.

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