Fall 2019 AGEC 325 Assignment 20 1 On the corn budget below, use the right-hand column to calculate your modified corn enterprise budget. (If there is no change, use the budget value) CORN Price or Cost Per Unit Your Estimates Value or Cost Quantity GROSS RECEIPTS 140 bu $315.00 $2.25 Corn VARIABLE COSTS Preharvest $37.50 30.0 lbs. $1.25 Seed 25.00 100.0 lbs. 0.25 Fertilizer (N) Fertilizer Application Herbicide 3.00 3.00 1.0 acre 4.0 lbs. 24.00 6.00 6.00 1.0 acre Machinery 6.00 10.40 1.0 re 10.40 Tractors 16.80 2.1 hrs. 8.00 Labor 7.36 Interest on VC (6 months) 12% 122.70 $130.06 Subtotal Harvest Costs 20.00 Custom combine 1.0 re 20.00 140 bu 13.30 Custom haul 0.095 Subtotal $33.30 Total Variable Cost $163.36 INCOME ABOVE VARIABLE COST $151.64 FIXED COSTS Machinery 8.20 1.0 re 8.20 Tractors 16.00 1.0 acre 16.00 Land 110.00 1.0 acre 110.00 Total Fixed Costs $134.20 TOTAL COSTS NET RETURNS $297.56 $17.44 1. Would you rent the land for $175.00 per acre? Why or why not? 2. If the price of corn turns out to be $5.00 per bushel, what yield would be necessary to just cover all costs including your labor cost? 2 AGEC 325 Fall 2019 Assignment 20 Rather than developing an enterprise budget from scratch, it is often easier to begin with one developed your State Cooperative Extension Service or some other source and modify it to fit your individual situation. Assume you are currently farming and have the opportunity to rent an adjoining 300 acres where you would grow only corn. You would like to know if it would be profitable to rent this land. To help with your decision, you have acquired the attached enterprise budget for corn from your loca county extension agent but feel you must make the following changes for the budget to fit your situation. n the corn budget table, use the right-hand column to calculate your modified corn enterprise budget. (if there is no change, use the budget value) A. Corn price is expected to be $2.40 per bu. but you expect 150 bu. per acre. (Note yield change affects hauling costs.) B. Seed price is now $1.75 per pound. C. You can now buy fertilizer for $0.30 per pound. Application cost is the same. D. Herbicide is now $6.75 per pound. E. Tractor & machinery variable costs should be 25 % higher than budget values. F. You would like to make $10.00 per hour for your labor and your big machinery should reduce labor needs to 1.8 hours per acre. G. Opportunity cost of your capital is 10 % . H. Machinery and tractor fixed costs should be only 85 % of budget values. You can rent the land for $125.00 per acre. Custom combine now costs $22.50 per acre. I. J. Fall 2019 AGEC 325 Assignment 20 1 On the corn budget below, use the right-hand column to calculate your modified corn enterprise budget. (If there is no change, use the budget value) CORN Price or Cost Per Unit Your Estimates Value or Cost Quantity GROSS RECEIPTS 140 bu $315.00 $2.25 Corn VARIABLE COSTS Preharvest $37.50 30.0 lbs. $1.25 Seed 25.00 100.0 lbs. 0.25 Fertilizer (N) Fertilizer Application Herbicide 3.00 3.00 1.0 acre 4.0 lbs. 24.00 6.00 6.00 1.0 acre Machinery 6.00 10.40 1.0 re 10.40 Tractors 16.80 2.1 hrs. 8.00 Labor 7.36 Interest on VC (6 months) 12% 122.70 $130.06 Subtotal Harvest Costs 20.00 Custom combine 1.0 re 20.00 140 bu 13.30 Custom haul 0.095 Subtotal $33.30 Total Variable Cost $163.36 INCOME ABOVE VARIABLE COST $151.64 FIXED COSTS Machinery 8.20 1.0 re 8.20 Tractors 16.00 1.0 acre 16.00 Land 110.00 1.0 acre 110.00 Total Fixed Costs $134.20 TOTAL COSTS NET RETURNS $297.56 $17.44 1. Would you rent the land for $175.00 per acre? Why or why not? 2. If the price of corn turns out to be $5.00 per bushel, what yield would be necessary to just cover all costs including your labor cost? 2 AGEC 325 Fall 2019 Assignment 20 Rather than developing an enterprise budget from scratch, it is often easier to begin with one developed your State Cooperative Extension Service or some other source and modify it to fit your individual situation. Assume you are currently farming and have the opportunity to rent an adjoining 300 acres where you would grow only corn. You would like to know if it would be profitable to rent this land. To help with your decision, you have acquired the attached enterprise budget for corn from your loca county extension agent but feel you must make the following changes for the budget to fit your situation. n the corn budget table, use the right-hand column to calculate your modified corn enterprise budget. (if there is no change, use the budget value) A. Corn price is expected to be $2.40 per bu. but you expect 150 bu. per acre. (Note yield change affects hauling costs.) B. Seed price is now $1.75 per pound. C. You can now buy fertilizer for $0.30 per pound. Application cost is the same. D. Herbicide is now $6.75 per pound. E. Tractor & machinery variable costs should be 25 % higher than budget values. F. You would like to make $10.00 per hour for your labor and your big machinery should reduce labor needs to 1.8 hours per acre. G. Opportunity cost of your capital is 10 % . H. Machinery and tractor fixed costs should be only 85 % of budget values. You can rent the land for $125.00 per acre. Custom combine now costs $22.50 per acre. I. J