Cropping Decisions

April 2004

Introduction

Due to the cyclical nature of agricultural product prices farmers are often faced with management challenges. When crop prices are low and margins are small, crop planning is increasingly important as farm managers strive to maximize net farm income. Deciding what crops to grow and the number of acres of each crop to plant are complex management decisions. Each year farm managers go through a process of deciding what crops to grow on each field. Decisions may be made on a field by field basis or on a crop rotation basis. If the crop rotation method is used the manager may choose several crop rotations and then decide which fields should be in each crop rotation. The decision as to which rotation should be used in each field will depend on many factors. This Farmfact provides a process for making cropping and rotation decisions.

When farmers are making cropping and rotation decisions the primary consideration is economics. However once they have determined the crops that will provide the highest net returns they will often consider rotations, weed problems, herbicide residues and various other factors.

• What combination of crops will provide the maximum net returns per acre? This is the most important decision farm managers will make. It is important to consider the higher net income crops in terms of risk and probability of achieving the high level of net income. Many of the specialty crops are higher risk crops and usually require greater managerial input and marketing skills in order to achieve this higher net income.

• When making long term planning decisions producers should calculate the total revenue, total expenses and return over total expenses for all of the crops that they are considering growing. However, when deciding what crops to plant next year you can use the return over variable expenses since the other (fixed) expenses are generally the same for all crops. Saskatchewan Agriculture and Food prepares Crop Planning Guides each year for the Black, Dark Brown and Brown soil zones and also a Crop Planning Guide for Alternative Crops such as pulses, oilseeds, spices and other crops. Producers can use these publications as a guide in calculating their return over total expenses, and return over variable expenses for each crop.

• To simplify the decision process further, cropping decisions can be made by subtracting the major variable expenses from estimated gross revenue for each of the crops being considered. Figure 1 is a short form for making cropping decisions.

• When comparing the return over major variable expenses the crops should be divided into two groups; one group should contain pulses, oilseeds, spices and other crops (Figure 2). The second group should contain cereal crops such as wheat, durum, barley, oats, and canary seed (Figure 3). The crops in each group should be ranked separately based on return over major variable expenses per acre with 1 being the highest net returns per acre in each group.

Figure 1: Return Over Major Variable Expenses

• A crop rotation is a recurring sequence of crops on a particular field. There are distinct advantages to growing different crops in a rotation. A well-planned rotation facilitates control of weeds, insect pests, plant diseases and helps to preserve organic matter in the soil.

• Some crops require a minimum number of years before that crop can be reseeded in the same field. If a minimum number of years are not left between some crops, disease pressure may reduce yields in subsequent years.

• When setting up a crop rotation first decide what crop will earn the highest return over major variable expenses per acre on your farm using your own yields and costs. Choose the crop that ranked highest when you consider both cereal and non cereal groups of crops. Base your rotation on this crop and maximize the number of acres planted to this crop each year. In terms of managing risk there are some benefits to growing an equal number of acres of the crop each year. If the number of acres seeded to the crop vary each year then you may end up with a low number of acres on a year when the price is high and vise versa.

• If you have determined that a higher value crop like canola is one you would like to maximize your production of each year, then you must decide how many years you want to leave between planting that crop in the same field. If you decide to grow canola every fourth year then that will be the basis of your crop rotation. We will assume a four-year rotation maximizing the canola acres on one quarter of the total farm acres each year.

• Next decide on the crop that provides the second highest net return per acre and maximize the number of acres of that crop. If the crop with the second highest net return per acre crop is peas for example, then you could plant one quarter of your acres to peas.

• It is generally recommended to rotate crops from a cereal to a pulse or an oilseed each year to reduce disease carryover. To achieve this after the canola crop you may want to seed a cereal. The cereal crop could be wheat, durum, barley, oats, or canary seed. Your four year rotation will be canola / cereal / peas / cereal. On other acres you may want to choose a different rotation better suited to soil or weed problems. For example you may choose a six-year rotation, which could be canola/cereal/flax/cereal/lentil/ cereal. Remember to go through an economic analysis on the cereal crops to see which of them will provide the best net return per acre on your farm. If you are going with a four-year rotation then typically you will have ½ of your acres in cereal type crops each year. Do you want to risk all of your cereal acres in one crop? You may decide to plant several different cereals to spread out the risk.

• Summerfallow is another rotation alternative. Fertilizer and weed control are good investments. Therefore, if cash flow for the purchase of crop inputs is limited it may be better to apply the correct input levels to fewer acres of crop and have some summerfallow in your rotation. Remember, if you are comparing continuous stubble crop to a fallow seeded crop you must add the summerfallow costs to the fallow seeded crop expenses. If you have a field with a serious or special weed problem that field may receive the most benefit from being summerfallowed.

• Forage crops are another rotation alternative. Including forage crops for seed, hay or dehydrated hay production can be a good diversification alternative to grain production. The use of legumes in a rotation can reduce the amount of supplemental nitrogen required for crops following the legume.

• Considering the weeds that you have in your fields, can you grow the above crops and still keep the weeds under control? For example, scentless chamomile may prevent lentil or pea production. On fields that have scentless chamomile you may use a canola / cereal / flax / cereal rotation so you can apply chemicals like Lontrel. In the cereal years of the rotation you can apply chemicals like Buctril M, Curtail M or Refine Extra to control or suppress scentless chamomile seedlings. If you have Canada thistle it may be necessary to use a pre-harvest Roundup application the year before the pulse or oilseed is planted. For more information on weeds and chemical application refer to the Saskatchewan Agriculture & Food publication "Guide to Crop Protection".

Herbicide Residues and Resistance

• Consider the chemicals you have applied in past years. Will chemical residues still be present in the soil that could reduce the yield or result in a crop failure if certain crops are grown? For example if you have used trifluralin in the last several years you may not be able to seed canary seed on those fields because trifluralin residues may control the canary seed or reduce the canary seed yield.

• Considering the crops that you are growing this year, do any of them require the use of chemicals that would restrict your cropping options in the future? Check your chemical rotation for repeated use of chemicals of a particular group, which could lead to the development of herbicide resistant weeds on your farm.

Nitrogen Fixation

Legumes such as lentils, peas, chickpeas or beans are capable of fixing their own nitrogen requirements which can reduce or eliminate supplemental N requirements in the year they are grown and also will reduce the amount of N required to be applied to the crop following the legume.

Insect and Pest Control

• Crop pest control is one of the benefits of a good crop rotation. Rotating from a cereal to a pulse or an oilseed and maintaining the recommended intervals between crops that are susceptible to the same pests can help eliminate the need to apply insecticides in the crop.

• Insect or pest infestations may require a change of cropping plans. For example, if wheat midge is forecast for your area you may decide to seed canary seed instead of wheat.

Straw Management

• It is beneficial especially in direct seeding to follow a cereal crop that produces a large amount of straw with a pulse or oilseed that produces less straw. By rotating crops in this way you can avoid a large build up of straw on the soil surface which can cause problems with the seeder plugging resulting in lumpy fields, poor seed placement and uneaven germination. Crop rotation can be used in conjunction with a good straw chopper and chaff spreader to assist in straw management.

Challenges of growing new and different crops

• Extending rotations requires the growing of new, different and specialty crops. For some of these crops there are reasons why they are not commonly grown crops. The following are some of the challenges to growing some specialty crops.

• Some crops are more difficult to harvest than others. For example, canary seed, flax and solin can be difficult to combine in damp or tough conditions. The maturity date for chickpeas can be delayed if weather conditions stay cool and wet.

• Some crops require specialized equipment. For example, peas may require either a special swather with pickup reels or a flex header for straight combining the peas. Canola may require the use of a shearing devise on the end of the swather to cut through the standing canola and reduce piles caused by plugging. In some cases it will pay to purchase specialized equipment but in other cases where the number of acres is small or you are growing the crop for the first time you may want to hire a custom operator. It is important to consider these additional costs when doing your economic analysis.

• It is important to be flexible with your crop rotations so that if a new crop provides the highest net return per acre on your farm you are able to substitute one crop for another in order to maximize your total net farm income. As long as you substitute a cereal crop for other cereals and pulse and oilseeds for other pulse and oilseed crops your basic rotation still remains intact.

• You may have several rotations on your farm. The rotations will typically be four or six years but can be any length that suits your needs. These will depend on weed problems, and chemical residues in specific fields, machinery capabilities for special crops, and the risk of seeding a large number of acres to one crop.

Crop Records

• Developing a method of keeping records of field history is an important part of farm management. Diverse crop rotations, specialty crops and the increasing risk of herbicide carry over and resistance makes the maintenance of accurate crop records an important activity. The failure to monitor cropping history can result in crop failures and major financial losses. Field history record systems are available from chemical companies and from Saskatchewan Agriculture and Food.

Marketing your production and managing price risk can add as much to your bottom line as making the best production decisions. The best crop plans may be hampered if the product price falls before you can produce and sell the crop. Producers should consider marketing strategies in conjunction with their cropping plans.

There are several methods you can use to reduce your price risk. You can lock in commodity price by using the futures market or options market. Basis can be locked in using a basis contract. Or if you want to lock in your on farm price it is necessary to lock in both price and basis. This can be done either by using a futures contract and a basis contract or by signing a deferred delivery contract (DDC). For special crops the producer may enter into a production and price contract. The difficult decision is when should I lock in a price and when should I wait for higher prices?

Changing basis levels and the signals these changes provide to the grower can be categorized into one of four marketing situations. These are summarized in Figure 4.

Figure 4: Basis Signals

If market signals suggest pricing is appropriate then you should consider locking in a price on part of your production at the following times:

1. Pre production pricing of a portion of your crop. Care must be taken not to price too much production before harvest in case you have a poor crop.
2. Summer pricing of part of the crop after planting but before harvest.
3. Cash sales of the crop after harvest.

• Figure 5 is a checklist of things to consider when making cropping plans.

• The first section of the form is a cropping history. This will help to determine if the crop that you are planning to seed this year is appropriate for this field. You should consider when the planned crop for the current year was last grown in this field and when a similar disease and insect host crop was seeded in this field.

• Are there any diseases or pests forecast for your area this year? This information may affect your cropping plans.

• What herbicides have been applied to this field in the last four years and will they affect the planned crop? What herbicide resistance group were the applied chemicals in and what group does the weed control product belong to that you propose to use this year? Attention paid to herbicide resistance groups is one way to reduce the risk of the weeds on your farm becoming resistant to herbicides.

• What are the problem weeds in this field? List the problem weeds on lines "a", "b" "c" and "d" under the planned crop.

• Can the problem weeds be controlled in the planned crop and what chemicals will be required to control the weeds in this crop? List the groups to which these chemicals belong. List the chemical to control weed "a" on line "A" under the planned crop. List the chemical to control weed "b" on line "B" under the planned crop. List the chemical to control weed "c" on line "C" under the planned crop. List the chemical to control weed "d" on line "D" under the planned crop.

For further information:

Financial Programs Branch,
Saskatchewan Agriculture and Food
125 - 3085 Albert Street
Regina, Saskatchewan
S4S 0B1

phone 306-787-5963