Gibson Insurance Group

The Risk Management Specialist

BUDGETING FOR 2023

After selling corn in the mid to high $6 range and beans north of $14.50, 2022 has left us wondering what to expect for 2023. This month many of us will be purchasing inputs for the coming year so the appropriate question is what will our break even prices be for 2023? We know that inputs have increased considerably. So, now is the time to run enterprise analysis to see what will likely work for 2023.

For this exercise I used the Purdue University spread sheet and modified it with data that closely fits most producers in Missouri. Your figures will differ from this example, so feel free to add your numbers to the spreadsheet to closely reflect your farm.

Don’t be automatically alarmed when these budgets show a negative return in the end.

We have made the assumption that corn will bring $6.45 and beans will be $13.80. This may not be the fact at all. By using these conservative prices we did see consistent income over variable costs.

Overhead costs can vary greatly for each farm.

¨ What is the rental rate or the value you will use for the land?  We choose $150.00 /acre for this example.

¨ Equipment ownership costs were calculated at $921,900 / 1000 acres of crop planted.

¨ Overhead costs can be reduced by spreading machinery out over more acres in the form of custom work. This is especially true if you have extra harvest equipment or earth moving equipment on your operation.

¨ Hired and family labor was also included

This calculation helps us find out breakeven costs for each crop per bushel. This helps us easily identify when to start marking our crops with the increased input coming this year.

In the past, $6.50 corn would seem like a great price but for 2023 this may only bring $75 over our variable costs and leave little to the overhead expenses of labor and machinery.

This budget reflects the same scenario that we have seen for the last few years where the wheat and double crop bean enterprise has the highest return.

When you enter your own numbers on this spread sheet you can find where are break even prices are. This will allow you to easily identify profitable sales opportunities. More and more producers are using budgeting tools in conjunction with crop insurance to ensure profitable operations.

Just like in 2022, 2023 will again be a challenging year even with grain prices on the rise. By using budgeting tools with realistic number you will have a fighting chance at having a profitable 2023.

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