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2012 Cropping Returns

It appears that the 2012 growing season will produce quite variable yields across the Southwest Slopes and Riverina as many areas have received only decile one growing season rainfall for the year.  Areas to the east or those fortunate enough to be under a storm may achieve average yields, while in other areas crop yields will be below long term averages.

However, many businesses will still meet budgeted income targets from cropping as prices have increased above those budgeted. Profitability for the year will be influenced largely by expenditure.

The following table looks at the budget v’s likely actual yields and prices for wheat and canola in the high and medium rainfall zones. The table demonstrates that although crop yields may be below budget, the increase in price is likely to see returns not too dissimilar to those budgeted upon.

HRZ = high rainfall zone

MRZ = medium rainfall zone

 

 

 

 

 

 

 

 

 
For example, if the budgeted harvest returns for wheat were 3.0 t/ha @ $180/t and the actual returns are 2.0 t/ha @ $260/t the gross return falls by only $20/ha.

For canola, where budgeted returns were 1.3 t/ha @ $450/t, and likely actual returns are 1.0 t/ha @ $530/t, gross returns have fallen by $55/ha.

The difference for canola is greater as the percentage increase in price has been smaller. However, there may still be significant compensation for reduced yield by the price increase.

As with any year, the financial success or failure of the season is likely to be dictated by cost control to a large extent. Businesses which have applied inputs (particularly Nitrogen), applicable to realistic long term yield targets are likely to be profitable in 2012.