Canada Markets

Saskatchewan Crop Returns as Yields Vary

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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Given the assumptions made in Saskatchewan Agriculture's Crop Planning Guide, the blue bars represent the crop return over variable costs based on targeted or 80th percentile yields, while the brown bars represent this return when average yields are realized, based on data for the dark brown soil zone. (DTN graphic by Cliff Jamieson)

Saskatchewan Agriculture's 2020 Crop Planning Guide includes calculations for a targeted crop yield for each soil zone, which is defined as "the top 20% (the 80th percentile) production of the five-year average yield for each crop in each soil zone." The study says this yield reflects a higher level of management, improvements in plant genetics and higher input utilization.

Based on assumptions made, the calculated returns over variable costs based on this target yield are shown by the blue bars on the attached graphic, utilizing data reported for the dark brown soil zone. This return ranges from $75.75/acre as reported for malt barley up to the $383.85/acre reported for green peas. Next to green peas, four crops are shown to range from $199.82/acre (canola) to $251.83/acre (large green lentils), with red lentils and flax also falling within this range.

Leaving all assumptions static, the brown bars represent the returns over variable costs when yields slip to average levels for the dark brown soil zone. Given the selected crops shown, returns fall from $90.62/acre for barley to as much as $196.50/acre for green peas from returns shown for the 80th percentile yields. Three crops -- malt barley, soybeans and winter wheat -- show the potential for a per-acre loss, while yellow peas show only a modest return of $4.40/acre.

This data is viewed as a starting point only, with producers encouraged to make adjustments based on their own cost structure, while setting their own target yields. Producers will view results differently based on their own risk tolerance, with the returns generated using the 80th percentile yields viewed as an opportunity for some, while the reduced returns realized when yields fall to average levels may be viewed as a risk for others.

It is interesting to note the difference in this data as one moves across the soil zones. According to early AAFC forecasts, durum acres are forecast to increase by 15% or 741,300 acres in 2020, the largest increase in acres seen in any crop in the February forecast. Saskatchewan Agriculture estimates the return over variable costs at $144.84/acre on the brown soil zone at the 80th percentile yield, falling to a return of $74.77/acre using average yields for the brown soil zone, well above the $24.35/acre return on the dark brown soil zone, making durum a more popular option in the south. At the same time, there are a number of factors that go into this decision and the rapid movement seen in durum this crop year is very much a supportive feature.

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