Precision Profits By The Field

Kurt LawtonEducation, Financing

Gregg Carlson, South Dakota State University agronomist and precision farming math whiz, has written extensively about numerous precision topics. “A Field is a Profit Center,” is an amazing spreadsheet look at the agronomic-economic building blocks that make fields profitable.

Very few farmers conduct profitability analysis of their fields. As producers expand beyond their operator owned acreage, it becomes increasingly necessary to know input – output economics so that an appropriate value can be paid for land rental. Conducting whole field profit center analysis will improve management decisions and answer management questions.

Analysis of a field’s line by line input – output is the very basis of the process of building greater agronomic – economic understanding and ultimately profitability. Discussed in this guide is a simple, cost effective (time and money), and understandable method that will enable most producers to analyze the profitability of a field. An Excel spreadsheet is used for the field cost accounting analysis.

The Field Profit Center accounting method demonstrated in this guideline is a simplification of the economic analysis accomplished by more complex approaches. It does, however, lead to a far more complex analysis of the agronomic – economic (rather than just the economic covered by most analysis) building blocks that make a field profitable.

Every line of a Profit Center Analysis must be evaluated for both economic and agronomic considerations. This thought is perhaps the most profound of this discussion. Profit center analysis is the umbrella analysis with an extensive array of subordinate agronomic – economic analysis subordinate to it. A 1000 acre corn producer must strive to save $5/acre of production costs (without impacting production) or strive to make an additional $5/acre by increasing production on all farmed acres. When a 1000 acre producer obtains this goal he will earn himself $5000 (a bonus). Top profitability farmers understand this.

To understand the details, read his entire paper.