| [Image: Mechanical Planting] | | [Image: Manual Planting in 1947] | | | | | | |
Michael E. Salassi
The production of sugarcane in Louisiana is much more complex, from a farm management perspective, than the production of other major crops such as cotton, soybeans or rice. Although some production decisions are similar, others are unique to sugarcane in part because of the perennial nature of the crop. Unlike annual crops such as cotton or soybeans, which are planted from seed and harvested each year, sugarcane is planted vegetatively and harvested over several years. Sugarcane growers purchase disease-free seedcane for planting. This seedcane acreage is then expanded (harvested and replanted) over a couple of years until it is then planted in production fields to be harvested as millable sugarcane. A typical sugarcane field in Louisiana may be harvested over three to five or more years before it is replanted. Growers must decide when sugarcane fields should be plowed out and replanted.
All of these various decisions directly affect the net returns of growers. Economic research on sugarcane production conducted by the Louisiana Agricultural Experiment Station (LAES) analyzes the impact of these various production decisions on the costs of producing sugarcane in Louisiana as well as the market returns received by sugarcane growers. Following are three examples of recent economic research by the LAES that help sugarcane growers make sound farm management decisions for maximum economic return.
Production costs
Good management is a crucial factor in the success of any business, and the business of farming is no exception. For sugarcane farming to be successful and economically viable, sugarcane growers must know what impact specific farm management and production decisions will have on production costs. To provide information to sugarcane growers that can aid farm management and production decisions, the LAES annually publishes detailed estimates of the projected costs and returns of producing sugarcane in Louisiana.
Annual projections of the costs and returns associated with producing sugarcane in Louisiana are estimated for tenant-operators producing sugarcane in two budget formats. One format is a summary of costs and returns for a particular phase of sugarcane production. This format presents costs by broad categories such has fertilizer, herbicides, insecticides, labor, fuel and repairs. The other format presents a detailed list of the field operations and equipment size along with the associated costs for tractors, other machinery and input materials. Specific phases of the sugarcane production cycle for which production costs are estimated include fallow field operations, seedbed preparation, planting cultured and propagated seedcane, plantcane and stubble crop field operations, and harvest operations.
Additional information provided in the annual production costs and returns reports includes whole-farm income and expense estimates as well as breakeven prices of raw sugar to cover total specified production costs at various yield levels. Together these budget projections provide the detailed information growers need to adjust the published estimated budgets to their specific farm operations. In addition, this report contains detailed cost estimates for an extensive list of equipment and operating inputs that may be used to modify budgets contained in the report or construct new enterprise budgets.
This report, entitled “Projected Costs and Returns—Sugarcane,” which is published each January, is available through parish extension offices or on-line through the LSU AgCenter’s Department of Agricultural Economics and Agribusiness Web site—www.agecon.lsu.edu.
Crop cycle length
The widespread adoption of the high-yielding sugarcane variety LCP 85-384 over the past few years has resulted in two significant changes in the Louisiana sugarcane industry. Plant characteristics of this variety make it suitable for combine harvesting and helped to promote the conversion from wholestalk harvesting to combine harvesting. Second, LCP 85-384 is an excellent stubbling variety, resulting in the expansion of standard sugarcane crop cycles beyond harvest of second stubble. As a result, Louisiana sugarcane growers are trying to determine the optimal number of years to keep a sugarcane field in production before replanting and starting a new crop cycle. Because of soil type differences and other factors that affect yield and production costs, this decision must be made annually on a field-by-field basis.
Research is under way to address this issue and provide sugarcane growers with information to use to determine the optimal number of stubble crops to keep in production. The rule to use in making this determination is: keep a stubble crop in production if the estimated net returns from the harvest of that crop increases the average return per acre over the entire crop cycle. Otherwise plow out the stubble and start a new crop cycle.
Outfield trial yield data over the 1996-2000 period for major sugarcane varieties produced in Louisiana are being used to determine the optimal crop cycle length which would maximize the net present value of producer returns. Cane yield and sugar per ton data for plantcane through third stubble are used to estimate the annualized net return of sugarcane production through harvest of second and third stubble crops and to determine the breakeven level of fourth stubble yields that would economically justify production and harvest.
Analysis of yield and net return data for the varieties CP 70-321, LCP 85-384 and HoCP 85-845 indicated that minimum yield levels necessary to keep older stubble in production for harvest depend directly upon the yields of the prior crop cycle phases and differ significantly across varieties. Estimated breakeven yields for major varieties of sugarcane produced in Louisiana will provide growers with benchmarks they can use in determining whether a specific field should be kept in production or plowed out and replanted.
Some farm management decisions associated with sugarcane production are made infrequently, but yet have a significant impact on farm production costs and returns. One such decision is related to precision grading of land. Precision grading is an improvement that increases the value of agricultural land. The costs of precision grading represent a long-term investment in the productive capacity and profitability of cropland.
Grading land
The main purpose of grading land is to level the field’s surface and grade it to a specific slope that will improve drainage of water from the field. Improved drainage can reduce the number of drainage ditches required. Land used for drainage ditches can be returned to sugarcane production, thereby increasing sugarcane production and gross returns per acre.
Before investing in precision grading, a couple of key cost considerations should be addressed. The first involves whether the producer should purchase the laser-leveling and dirt-moving equipment and do the work himself or hire the work out to someone else on a custom-hired basis. The second cost consideration is determining how many years of sugarcane production will be required to recover the investment in precision grading costs.
The costs associated with precision grading sugarcane fields in Louisiana were estimated for the situation in which the producer would purchase the laser leveling equipment and perform the work with on-farm labor. These cost estimates were then compared with custom rate charges for land grading. Costs of precision grading sugarcane fields on a per acre basis were an estimated $84 per acre for operating costs, including fuel, repairs and labor. Fixed costs were an estimated $70 per acre, resulting in an estimate of total costs of $154 per acre to move 300 cubic yards of dirt.
On a cost per unit of dirt moved basis, this total cost estimated translates to a total cost of $0.51 per cubic yard of dirt moved. Operating costs were estimated to be $0.28 per cubic yard, and fixed costs to be $0.23 per cubic yard. With custom grading charges in the range of $0.80 to $0.90 per cubic yard, a sugarcane grower planning to precision grade large tracts of acreage over a period of several years could save substantial costs by performing the work with on-farm labor. It was estimated that the initial investment in precision grading costs could be recovered in four to six years from the increased sugarcane production per acre.
Determination of whether to precision grade fields with owned equipment and on-farm labor or hired out on a custom basis will depend on the total acreage to be graded and labor availability. For smaller land tracts of just a few hundred acres, it may be more economical to hire the grading work on a custom basis. However, if several hundred or more acres are planned to precision grading over several years, purchasing the grading equipment and performing the work with on-farm labor is probably the most economical decision. Results of this study provided growers with evidence that precision grading of sugarcane fields can be an economical way to increase returns from sugarcane production.
Michael E. Salassi, Associate Professor, Department of Agricultural Economics and Agribusiness, LSU AgCenter, Baton Rouge, La.
(This article appeared in the fall 2001 edition of Louisiana Agriculture.) |