The following projected budgets for 2009 represent what are expected to be typical costs and returns for commercial sized producers using production practices that are expected to produce above average yields. Adjustments will be needed to reflect individual farm productivity, size of operation, and alternative production practices.

Crop prices and operating cost projections are based on FAPRI Representative Farms data, survey information from a variety of sources such as University of Missouri extension specialists, farm supply dealers, producers, USDA cost data, machinery economic-engineering cost estimates and FAPRI economic baseline projections.

Volatile price action and declining prices, along with uncertain economic factors, make price projections difficult. The crop prices in the budgets assume price downtrends will eventually be broken and some post-harvest price recovery will occur. However, it is important to recognize that volatile markets can result in prices higher or lower than those used in the budgets. Prices received also depend upon changing market outlook and timing of sales. Basis (spread between cash and futures prices) also varies considerably and can result in notable differences in cash bids at different locations.

Real estate charges are calculated as capitalized rent returns on estimated land value. In recent years, the capitalization rate has tended to decline as land prices were bid up and cash rent increases lagged behind the land price increases. However, with sharply higher grain prices during the first half of 2008, landowners have indicated a desire to "catch up" by increasing rents to capture a larger share of land returns resulting from higher grain prices. However, the collapse of prices during the fall of 2008 and increased input costs are likely to dampen enthusiasm for bidding up cash rents. Real estate values are projected from MU and USDA land value and rent surveys. The landowner's costs (taxes, insurance, etc.), along with returns on investment, would be covered by the capitalized returns on land value.

Crop Production Budgets
The projected budgets for the 2009 crop year are based on typical production practices and machinery used by farms with 1700-2000 crop acres located in north, central and southwest Missouri. Smaller farms that use smaller equipment and custom hire more field operations tend to have somewhat higher per acre production costs. Larger farms that have larger equipment and gain some economies of scale with volume input pricing may have lower production costs per acre. Southeast Missouri farm size, equipment mix and production practices also differ slightly.

Corn, soybean and grain sorghum budgets assume one or two tillage passes prior to planting. Wheat and double-crop soybean budgets assume no-till planting. Emerging trends (included in the budgets) appear to be use of split herbicide applications, increasing ownership of spraying equipment, precision agriculture technology and semitrucks.

Forage Budgets
Forage crop mix, forage acres per farm, and equipment lines tend to be somewhat different in northern and southern Missouri. Northern crop/livestock farms tend to have fewer forage acres than southern Missouri farms, which are primarily livestock (beef/dairy). Since northern forage producers have more grain crop acres, larger tractors are often used in northern forage production. The southern Missouri climate is also better adapted to some warm season forages and fescue seed production.

Projected Prices and Costs Used in 2009 Crop and Forage Budgets

	Used in Budgets	Estimates for Regional Basis Adjustment
		Central	NE Mo.	NW Mo.	SW Mo.	SE Mo.
Corn, bu.	$ 4.00	$ 4.00	$ 4.00	$ 3.85	$ 4.10	$ 4.10
Soybean, bu.	$ 8.00	$ 8.00	$ 8.15	$ 7.80	$ 7.80	$ 8.25
Wheat, bu.	$ 6.00	$ 6.00	$ 6.00	$ 5.90	$ 6.30	$ 6.10
Grain sorghum, bu.	$ 3.70	$ 3.70	$ 3.75	$ 3.55	$ 3.75	$ 3.75
Corn silage, ton	$ 32.00
Alfalfa, round bales, ton	$ 125.00
Premium pasture, AUM	$ 18.00
Average pasture, AUM	$ 9.00

Cost Estimates Used in 2008/09 Budgets

Diesel fuel, farm delivered $2.90/gal.

Gasoline $2.60/gal.

L.P. gas $2.20

Electricity $0.085/kwh

Anhydrous ammonia $0.61/lb.

Urea $0.72/lb.

Phosphorus (P2 05 ) $0.88/lb.

Potassium (K2 0) $0.80/lb.

Lime $7 to $18/ton

Operating interest rate 8.50%

Unskilled labor (tractor driving, tillage, mowing, etc.) $11.50/hour

Skilled labor (planting, combining, spraying, etc.) $16.50/hour

Real estate charges as % of land value (capitalization rate):

Crop production 5% of land value

High quality forage production 4% of land value

Grass production 2% of land value

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