Annualized net return for various PEWI land use options and practices
The following slides provides the details of the individual analysis done for each
land use or practice (summarized below). Note: In the slides, land use that carries a
positive net value has a green band; land uses that carries a net cost cost have red bands.
Main Assumptions:
•
20 yr assessment horizon
•
4% discount real rate
•
Opportunity costs based on
average land rent for central
Iowa (District 5); $297/ac.
•
All costs and revenues based
on 2013/2014 Iowa or
regionally located prices.
•
Source data is presented.
•
Yield expectations for crops,
timber, and biomass are for
Central Iowa.
Multi-species Riparian BUFFER COSTS
COST DESCRIPTION
GRASS SEEDING &
MAINTENANCE
Disking Crop Land
Harrowing
Burning
Seed Cost (From Plant Schedule)
Airflow Spreader
fertilizer
Lime
Mowing
TREE-SHRUB PLANTING &
MAINTENANCE
Mechanical Site Preparation
Direct Seeding
Shrub Cost (From Plant Schedule)
Tree Cost (From Plant Schedule)
Tree/Shrub Hand Planting Cost
Mechanical Tree/Shrub Planting Cost
Chemical Weed Control
Mechanical Weed Control
Fabric Mulch
Land Rent @ $256/acre
Totals
Quant
Unit
Unit
Cost
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
AC
AC
AC
Total
AC
AC
AC
AC
$10.00
$3.85
$0.35
$25.67
$4.50
$13.47
$34.50
$6.80
1.00
0
905
905
100
1.00
AC
$10.00
AC
Total
$234.15
Total
$494.68
Per Plant $2.00
Per Plant $2.00
Per Plant $0.12
Per Plant $0.06
Per Plant $2.22
$256.00
Total
Dollar
Value of Timing (yr;
Costs a=annual)
Present
Dollar
Annualized
Value of Dollar Value
Costs
of Costs
$10
$4
$0
$26
$5
$13
$35
$7
0
0
3
0
0
0
0
a
$10
$4
$0
$26
$5
$13
$35
$92
$1
$0
$0
$2
$0
$1
$3
$7
$10
$0
$234
$495
$0
$1,810
$109
$6
$0
$256
0
$10
$0
$234
$495
$0
$1,810
$104
$6
$0
$3,479
$1
$0
$17
$36
$0
$133
$8
$0
$0
$256
$6,323
$465/ac
0
0
0
1
1
a
@4%
CRP payment for
Multi-species Riparian Buffer =
•
90% cost-share for buffer establishment
•
$100/acre “one-time” incentive bonus
•
$10/ac/yr practice bonus
•
80% of calculated annual rental payment
Annual worth of CRP* for buffer = $222/acre
* Based on 2012 Iowa NRCS estimates
Bear Creek, Iowa. Photo: T. Schultz
20-year Switchgrass Management Plan
Activities/materials
Establishment Costs (buy seed and plant)
Fertilization
Weed Control
Harvesting
Land Rent (opportunity cost)
Total Present Value Costs/acre
Revenue Source
Switchgrass Biomass
Total Present Value Revenues/acre
Year(s) Occurring Present Value ($/acre)
1
$65.54
Annual
$1,334.20
Annual
$129.61
2 - 20
$832.16
Annual
$3,165.40
$5,526.91
Year(s) Occurring Present Value ($/acre)
2 - 20
$6,189.59
$6,189.59
@ 5% Net Present Value/acre
$662.68
Annualized Value/acre
$53.18
Analysis adapted from: Duffy 2008.
www.extension.iastate.edu/agdm/c
rops/html/a1-22.html
Broad assumptions:
• Uniform yields @ 6
tons per acre
• Static input &
biomass prices @
$90/ton
Oak Ridge National lab, 2002
Crop rotations on
Owned land
Rotation Profitability Calculator
Ag Decision Maker -- Iowa State University Extension
For more information, visit Evaluating Profitability of Crop Rotations.
For information on long-term average yields, visit Iowa Corn and Soybean County Yields.
Place the cursor over cells with red triangles to read comments.
Enter your input values in shaded cells.
https://www.extension.iastate.edu/a
gdm/crops/html/a1-80.html
Corn-Soybeans (CS)
Needed PEWI Data:
•
Choose rotation (pick the rotation
option - CS, CCS, CC - that best
approximates your PEWI rotation)
•
•
•
Yield converted to per acre
basis
Look up current corn and or
bean prices.
Adjust input prices as needed.
•
Static input & commodity
prices
Uniform land rent charge =
$0/ac
bushels/acre
bushels/acre
$/bushel
$/bushel
135 lbs/acre
Corn-Corn-Soybeans (CCS)
1st Corn Yield Goal
2nd Corn Yield Goal
Soybean Yield Goal
Expected Corn Price
Expected Soybean Price
N Application to 1st Corn
N Application to 2nd Corn
\
\
\
$0.00
$0.00
135
190
bushels/acre
bushels/acre
bushels/acre
$/bushel
$/bushel
lbs/acre
lbs/acre
$0.00
-$50.00
-$100.00
-$150.00
-$200.00
-$250.00
-$300.00
-$350.00
-$400.00
-$450.00
-$500.00
Corn-Soybeans
Corn-Corn (CC)
Corn Yield Goal
Expected Corn Price
Typical N Application
Corn-Corn-Soybeans
CS
155 bushels/acre
$0.00 $/bushel
190 lbs/acre
Return to Management
Break-even corn price
compared to CS
-$250.53
Continuous Corn
CCS
Nitrogen Price Paid
P2 O5 Price Paid
K2 O Price Paid
Land Charge
Soybean Seed
Soybean Insecticide/Fungicide
Soybean Herbicide
$0.55
$0.38
$0.43
$0
$31.00
$0.00
$20.00
per pound
per pound
per pound
per acre
per 50 Lbs.
per acre
per acre
Wage rate
LP Price
Diesel fuel price
1st year Corn seed
1st Year Corn Insecticide
1st Year Corn Herbicide
Corn on corn seed
Corn on Corn Insecticide
Corn on Corn Herbicide
$11.00
$1.88
$3.58
$3.50
$0.00
$25.00
$3.50
$3.44
$3.44
-$442.94
#VALUE!
$1.23
per hour
per gallon
per gallon
per 1000 seeds
per acre
per acre
per 1000 seeds
per acre
per acre
Version 1.1
Author: Mike Duffy
David Correll
This data
needs to
be
entered/a
djusted
Note: this data is already “annualized”
CC
#VALUE!
Additional Inputs
General Assumptions:
•
Return to Management
Corn Yield Goal
Soybean Yield Goal
Expected Corn Price
Expected Soybean Price
Typical N Application
This data has already been adjusted to 2014 prices
Crop rotations on
Rented land
Needed PEWI Data:
•
Choose rotation (pick the rotation
option - CS, CCS, CC - that best
approximates your PEWI rotation)
•
•
•
Yield converted to per acre
basis
Look up current corn and or
bean prices.
Adjust input prices as needed.
Rotation Profitability Calculator
Ag Decision Maker -- Iowa State University Extension
For more information, visit Evaluating Profitability of Crop Rotations.
For information on long-term average yields, visit Iowa Corn and Soybean County Yields.
Place the cursor over cells with red triangles to read comments.
Enter your input values in shaded cells.
Corn-Soybeans (CS)
•
bushels/acre
bushels/acre
$/bushel
$/bushel
135 lbs/acre
Corn-Corn-Soybeans (CCS)
1st Corn Yield Goal
2nd Corn Yield Goal
Soybean Yield Goal
Expected Corn Price
Expected Soybean Price
N Application to 1st Corn
N Application to 2nd Corn
\
\
\
$0.00
$0.00
135
190
bushels/acre
bushels/acre
bushels/acre
$/bushel
$/bushel
lbs/acre
lbs/acre
$0.00
-$50.00
-$100.00
-$150.00
-$200.00
-$250.00
-$300.00
-$350.00
-$400.00
-$450.00
-$500.00
-$550.00
-$600.00
-$650.00
-$700.00
-$750.00
-$800.00
Corn-Soybeans
Corn-Corn (CC)
Corn Yield Goal
Expected Corn Price
Typical N Application
Corn-Corn-Soybeans
CS
155 bushels/acre
$0.00 $/bushel
190 lbs/acre
Return to Management
Break-even corn price
compared to CS
-$547.53
Continuous Corn
CCS
Nitrogen Price Paid
P 2 O5 Price Paid
K 2 O Price Paid
Land Charge
Soybean Seed
Soybean Insecticide/Fungicide
Soybean Herbicide
$0.55
$0.38
$0.43
$297
$31.00
$0.00
$20.00
per pound
per pound
per pound
per acre
per 50 Lbs.
per acre
per acre
Wage rate
LP Price
Diesel fuel price
1st year Corn seed
1st Year Corn Insecticide
1st Year Corn Herbicide
Corn on corn seed
Corn on Corn Insecticide
Corn on Corn Herbicide
$11.00
$1.88
$3.58
$3.50
$0.00
$25.00
$3.50
$3.44
$3.44
-$739.9
#VALUE!
$1.2
per hour
per gallon
per gallon
per 1000 seeds
per acre
per acre
per 1000 seeds
per acre
per acre
Version 1.1
This data
needs to
be
entered/a
djusted
Note: this data is already “annualized”
CC
#VALUE!
Additional Inputs
Static input & commodity prices
Uniform land rent charge =
$297/ac
Return to Management
Corn Yield Goal
Soybean Yield Goal
Expected Corn Price
Expected Soybean Price
Typical N Application
General Assumptions:
•
https://www.extension.iastate.edu/a
gdm/crops/html/a1-80.html
This data has already been adjusted to 2014 prices
Constructed Wetlands
Drawdown structure
Driving Sheet Piling for Outlet Structure
Removing Borrow Material from Wetland Location
Short-rotation
Woody Crop System
(SRWC) – Hybrid
Poplars
20-year Plantation Management Plan
Cost Activities/materials
Establishment Costs (buy stock & plant)
Maintenance Costs (mow and spray)
Harvest and Chip
Thin Between Rows
Thin Between Rows
Harvest and Chip
Land Rent (opportunity cost)
Total Present Value Costs/acre
Revenue Source
Year(s)
Occurring
1
1-3
10
11
13
20
Annual
Present Value
($/acre)
$306.00
$177.01
$2,332.87
$57.30
$31.18
$1,432.18
$3,165.40
$7,501.94
Year(s)
Occurring
10
11
13
20
Present Value
($/acre)
$5,525.22
$128.92
$70.16
$3,392.01
$9,116.31
$1,614.37
Woody Biomass *
Woody Biomass *
Woody Biomass *
Woody Biomass *
Total Present Value Revenues/acre
@ 4% Net Present Value/acre
Annualized Value/acre
$129.54
* Hybrid poplar yield data: R. Hall, Pers. Comm. 2012
Woody systems contribute to a whole host of potential societal benefits
in the form of ecosystem services. For example woody systems:
• Can provide critical habitat and/or travel corridors for a diverse array
of species], even in highly managed plantations;
• Can help stabilize soils and maintain soil quality and;
• Efficiently cycle water and nutrients and;
• Create long-term, below-ground reservoirs for carbon sequestration
(in both natural or plantation systems);
• May be ideal for restoring highly degraded lands and for
bioremediation treatments and.
Conventional Forest
Scenario Data: Species Distribution, Basal Area per acre
5%
Timber data used for analysis
from Amana Colonies, 2001 –
Compartment 10 Upper
Amana. Inventory conducted
by ISU Forestry students
(Amana is Iowa’s largest
industrial forestland owner)
2% 2%
4%
2%
White oak
Red oak
Shagbark hickory
American Elm
9%
American basswood
10%
55%
Hackberry
Cottonwood
14%
Analysis Assumptions:
Black walnut
other
•
Stumpage rates for W. Oak/R. Oak = $360/$260 MBF;
clearcut silvicullture; Rotation age = 65 years;
•
Biomass sales at $20/ton (tops/bark of merchantable species; all
non-merchantable trees)
•
Final stumpage value per acre at rotation age = $1,800 per acre
•
Additional $200/acre/year in hunting lease fees.
•
Harvest & biomass on-site processing costs $150/acre; $5/ac/year
overhead charge.
Equal Annual Income = $320/acre
• Hunting only $195/ acre
Managed hardwood forests can:
• Habitat & corridors for diversity of game/non-game species.
• Can help stabilize soils and maintain soil quality;
• Efficiently cycle water and nutrients;
• Create long-term, below-ground reservoirs for carbon sequestration
Grass-fed beef: Improved Pasture or Rotational Grazing
Assumptions:
• Finished grass-fed beef with hanging
weight right around 630 pounds
(which usually translates into about
1,000 pounds live weight).
Net profit for grass fed beef in Cornbelt
(2012) = $250 per head.
http://ebersolecattleco.com/
Profit data from
http://farmbiztrainer.com/docs/Grass_Fed_Beef_Presentation.ppt.
Potential Ecosystem Benefits
From Boody et al. 2005 adoption of grass-based livestock
systems would greatly:
• reduce emissions of greenhouse gases (40 %),
• decrease soil erosion (50 -80 %),
• decrease fuel use, and
• improve water quality (lower nutrient loss/ increased soil
mention)
http://www.wallacefarms.com/
• Enhance habitat for deer, turkey, quail, and other birds
(could increase by a factor of five).
Alfalfa Production: Average Net Revenue
Average Costs and Returns Over 4 Years
4
4
- Including Establishment Year
Average Cost per Acre
Fixed
Variable
Total
$233.62
$214.09
$447.71
$66.75
$61.53
$128.28
Average Costs per Year
Average costs per acre
Average cost per ton
Average
Total Cost
All Acres
$448
Average Gross Returns
Per Acre
All Acres
Average Gross Returns per Year
Expected Hay price
Hay Yield - Production Years
Average total returns
Average Net Returns per Year
$160.00
4 tons / acre / year
$521.00
$521
$521.00
$521
Average Net Return per Acre Over
Variable
Total
Net Return
Cost s
Costs
All Acres
$306.92
$73.29
$73
Data: ISU Ag Econ Extension; A. Johanns: http://www.extension.iastate.edu/agdm/decisionaidsall.html
Version 1.1
Contact: Ann Johanns
Date Printed:
4/7/14
Prairie ecosystems provide services that:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Disperse seeds
Mitigate drought and floods
Cycle and move nutrients
Detoxify and decompose waste
Control agricultural pests
Maintain biodiversity
Generate and preserve soils and fertility
Contribute to climate stability
Regulate disease-carrying organisms
Protect soil from erosion
Protect watersheds, streams & river channels
Pollinate crops and natural vegetation
Provide aesthetic beauty
Provide wildlife habitat
Provide wetlands, playas
Provide recreation
Provide research opportunities
Restored Prairie
•
On average in Iowa, the costs of restoring prairie
on agricultural land is $350/ acre/ year.
• Hunting leases are a possibility; assuming
$380/acre/ year lease revenue (e.g., $95/ acre x 4
hunting leases/ac/ year).
• Leaves a net revenue of $30/ year
≤ 10%
of total
cost
Site prep & plan ng costs…
+
~ 10% 15% of
total
cost
Management costs…
+
Upwards
of ~ 90%
total cost
Restored prairie at the Neal Smith National Wildlife
Refuge in Central Iowa
Opportunity Cost of land =
foregone rent or revenue
Net costs of conservation
Corn or Beans
Selecting conservation corn or beans assumes that the fields
involve the following Best Management Practices:
No-till cultivation
Cost and or savings associated
with this suite of BMPs:
• On average in Central Iowa,
about .05% of a field could
use a grass waterway =
$15/ac/year
• Cover crops, aerial seeded =
$34/ac/year
Cover crops (cereal rye)
Grass waterways
• No -till leads to a total savings
= $25/ac/year (mostly from
using less diesel, labor and
depreciation)
Total net costs* for
conservation crop ground =
$24/ac/year
Data sources: http://www.ipm.iastate.edu/ipm/icm/2000/10-23-2000/notillsteady.html;
Kling, C., Rabotyagov, S., Jha, M., Feng, H., Parcel, J., Gassman, P., & Campbell, T. (2007). Conservation
practices in Iowa: historical investments, water quality, and gaps. A report to the Iowa farm bureau and
partners. Final report. Iowa State University Center for Agricultural and Rural Development, Ames, IA.
* Does not factor any potential
yield increase or decrease