Crop options show profit potential

This is a most unusual year for farmers — a year in which they can pick and choose between commodities that offer a potential for profit.

“Farmers have had it rough for a long time,” says Marshall Lamb, research director for the National Peanut Research Laboratory in Dawson, Ga. “This year, they finally have some options.”

During a recent regional peanut meeting in east Alabama, Lamb compared the price of various commodities using calculations from WholeFarm, a computer-based farm planning system designed by the National Peanut Research Lab. WholeFarm is a planning system designed to optimize farm and financial planning decisions by developing formal farm plans specific to each field and farm operation.

“We have distributed more of these crop comparisons this year than ever before,” says Lamb. “We calculate the price of a commodity that will make it exactly equal to the returns per acre of another commodity, looking at both dryland and irrigated.”

In this case, peanuts were compared with corn, cotton and soybeans. “Corn selling for $3.50 per bushel means that peanuts on non-irrigated land would have to bring us about $322 per ton to have the same profitability,” says Lamb. “In our area, we cannot grow dryland corn and expect to make a good yield on it year after year. In our research studies last year, dryland corn made 21 bushels per acre. It can hurt you if you hit a dry spell at the wrong time. Dryland corn just isn't an option for us.”

Irrigated corn, however, is an option, he says. At $3.50 per bushel on irrigated corn, you would have to get about $421 per ton to make the same profitability on irrigated peanuts. If corn reaches $4 per bushel, you'd need to made $512 per farmer stock ton of peanuts, says Lamb.

“The strength we're seeing in corn should realize you a higher price on your peanuts whenever you're ready to market them,” he says.

If the price of cotton is about 55 cents per pound, a grower would need about $350 to $360 per ton on peanuts to reach the same profitability, he says. If cotton increases to 60 cents per pound, you would need about $400 per ton from peanuts. If cotton gets up to 65 cents per pound, a grower would need in the middle to high $400-per-ton range to make the same profitability, he says.

With $7 soybeans on dryland, a grower would need to make abut $400 per farmer stock ton of peanuts to match the profitability, says Lamb. On irrigated, a farmer would need to make $428 per ton from peanuts to make the same profitability as $7 soybeans.

“Soybeans don't compete as well as other crops against peanuts. At this point, I would discourage putting soybeans in an irrigated peanut rotation. There's too much risk involved. Whatever you make this year, you might lose it next year,” he says.

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