# APPENDIX C

The Economics of Growing Sugar Beets in Southern Idaho: A Short run Gross Margin Analysis

# The Economics of Growing Sugarbeets in Southern Idaho:
A Short Run Gross Margin Analysis

Prepared by:

Paul Patterson pattersn@uidaho.edu Extension Agricultural Economist University of Idaho Department of Agricultural Economics and Rural Sociology http://www.ag.uidaho.edu/aers

December 31, 2008

This report can be found at the web site shown above. Click on Resources and then Project Reports.

### Overview

Sugarbeets are grown under irrigation in the three dis tinct production zones of southern Idaho: Southwest (Treasure Valley), Southcentral (Magic Valley), and Eastern Idaho’s lower Snake River Plain. Sugarbeet planted acreage in Idaho has averaged just over 18 9,000 acres over the past ten years, ranging from a high of 212,000 to a low of 131,000 just this past year. Sugarbeet processing facilities are located in Nampa, Twin Falls and Paul, Idaho. Sugarb eets are traditionally the fourth most valuable crop grown in Idaho, behind potatoes (#1), wheat (#2) and hay (#3). Suga rbeets are an important cash crop and contributes to the overall economy of the state. A 2004 study of the sugarbeet industry in Idaho by University of Idaho agricultural economists showed a total contribution of the sugarbeet industry to Idaho’s economy of $1.08 billion in sales, $338 million in value-added, and over 7,000 jobs. Mainta ining a profitable and economically healthy industry is important not only to the growers, but to the state of Idaho.

Sugarbeet prices in recent years have been relativel y stagnant, while input costs have continued to increase. Sugarbeet prices over the past ten years aver aged approximately $39.60 per ton, ranging from a high of just over $44 to a low of just over $36 accord ing to data from the USDA. But this same situation also existed for most other commodities grown in so uthern Idaho. But when grain and forage prices spiked to unprecedented levels in 2007, growers saw an opportunity to capitalize on the high returns that these crops offered. Crops that were often viewed as money losing rotation crops by potato and sugarbeet growers had become the most profitable crop alternativ es available to growers. But the high grain prices were short-lived. As grain prices declined rapi dly after the 2008 harvest, growers once again are evaluating their cropping alternatives.

The objective of this analysis is not to tell growers what crops they should plant. The analysis presents a methodology that may be useful to growers and illust rates this method with comparison of sugarbeets to other potential crop alternatives for the three primary production regions of southern Idaho. The analysis is based on the University of Idaho’s crop costs a nd returns estimates, or enterprise budgets using input cost data for 2008 and crop prices for 2008 and projected prices for 2009. The analysis does not show whether or not any of the alternative crops are profitable. The modified gross margin analysis simply provides a way of comparing and ranking the crop alte rnatives and is best used as a short run planning
tool.

Method

Gross margin is defined as the gross revenue minus the operating or variable costs of production. Its primary use is to provide a relative comparison of crop alternatives in the short run, typically one year. The gross margin simply shows the contribution that each crop alternative makes to the farm’s fixed costs. An example of using this technique would be to calculate whether growing hard red spring wheat is going to have a bigger gross margin, and therefore cont ribute more to the farms fixed costs, than growing malting barley for example. In addition, this technique can be used to calculate the breakeven price or yield of alternative crops needed to achieve the same gross margin as the base crop. Three items are needed for each crop to make this comparison: 1) pr ice, 2) yield and 3) variable production costs. The fixed costs on a typical farm are not going to chan ge based on what crop is grown. The land payment, debt service and depreciation on machinery and irrigation systems, and permanent labor or management,

### the largest fixed costs, will be the same. There are so me reasons that using a gross margin analysis based on University of Idaho enterprise budgets is not th e same as a grower conducting the analysis using his/her farm specific data. Rather than using a consta nt value that would reflect the average for the farm, the fixed or ownership machinery costs in the Univ ersity of Idaho’s enterprise budgets are calculated based only on the specific machinery u sed to produce that crop, not an average cost. Also, the University of Idaho often uses custom rates to cost some operations, rather than assuming that the grower owns and operates all the machinery. For example, we use a custom combining and hauling in all our southern Idaho grain budgets. These custom rates charges all show up as an operating or variable cost, even though part of the charge is technically for debt service and depreciation on equipment. To avoid a bias against crops where custom rates are used for some major field operations, the analysis in this report uses a modified gross margin by subtracting the crop specifi c equipment ownership costs from the gross margin. The resulting modified gross margin value is a return to the land, irrigation syst em, general farm overhead and the owner-operators management and labor, and will be referred to as the Net Return.

Analysis

This report provides an analysis for each of the three primary growing regions of southern Idaho. Yield, production costs, and crop alternatives vary by re gion. The analysis presents five tables for each production region. Each table has a regional designation in addition to the table number. Eastern Idaho is A, the Magic Valley is B and the Treasure Valley is C. Table 1 lists the crops included in the analysis, the crop prices for 2008, and the projected crop prices for 2009. Table 2 shows the yield, price and the resulting gross margin for each crop for 2008. Table 2 also shows the operating expenses (variable costs) and the resulting gross margin when the operating cost is subtracted from the gross revenue. The next item shown in the table is the equipment ownership co sts specific to each crop. This value is subtracted from the gross margin to derive a modified gross margin , or the net return to all the other fixed factors.

Table 3 is similar to Table 2, except that the gross revenue is based on the 2009 price. No adjustments were made to the production costs. Table 4 pr esents a modified breakeven comparison that uses sugarbeets as the base crop and shows what price the othe r crops would have to have in order to generate the same net return to land, irrigation system, overhead and management based on the projected 2009 sugarbeet price of $45 per ton. Again, this analys is uses 2008 input costs. Table 5 presents a sensitivity analysis showing the breakeven prices of the alternativ e crops needed to generate the same net return as sugarbeets as the price of sugarbeets varies from $45 down to $40 per ton.

An appendix contains the 2008 sugarbeet costs and returns estimate, or enterprise budgets, for each of the three production regions. Appendix A-1 is for eastern Idaho, Appendix B-1 is for the Magic Valley and Appendix C-1 is for the Treasure Valley. The deta iled enterprise budgets for alterative crops are not included in this report. They are available in th e Excel spreadsheet, which is discussed later. The University of Idaho enterprise budgets are based on economic costs, not accounting or cash costs. All resources used in the production process are valued at a market rate, or opportunity cost. When all resources are valued in this manner, the bottom line shown is often negative. This does not necessarily mean that a grower would be losing money, however. It does, however, indicate that the grower is not receiving a market return on all the r esource used in the production process.

### Discussion

Commodity prices for all the crops shown in Tabl e 1 except sugarbeets are based on the author’s judgment. The sugarbeet prices were provided by the Amalgamated Sugar Company. Note that the alfalfa hay price used in the analysis is a blended pr ice based of feeder quality and dairy quality hay.

The analysis shown in Tables 2 and 3 is a static analysis, based on set values for yield, price and expenses. The Net Return value shown at the bottom of Table 2 clearly shows the higher Net Return of the grain and forage crops compared to sugarbeets based on the high prices that were available to growers for their 2008 crop. While not every grower realized these prices, these prices were available. In contrast, the Net Return at the bottom of Table 3 shows sugarb eets with a higher return than any of the grain and forage crops, except alfalfa.

An issue just as important as the ranking of crops base d on the Net Return is, how robust is this analysis? In other words, what happens when the price of these alternative crops change? The obvious answer is that at some point the ranking will change. Rather than going through a myriad of prices for each crop, a breakeven price can be calculated for each of the altern ative crops that will generate the same net return as the base crop, sugarbeets. What is the likelihood that the breakeven prices shown in Table 4 will be achieved? Will we see soft white wheat prices in sout hern Idaho above $6 per bu shel for the 2009 crop? Will the price of hard red spring wheat exceed $7? Th e breakeven prices shown at the bottom of Table 4 are higher than the 2009 projected prices for all commodities except potatoes and alfalfa hay in eastern Idaho and the Magic Valley. For the Treasure Valley, dr y beans and field corn al so have lower breakeven prices than the projected 2009 prices.

Another uncertainty that needs to be considered in this analysis is, how accurate or stable is the price of sugarbeets? What happens to the ranking of the crops in terms of generating net returns if the price of sugarbeets declines? Table 5 is designed to address this issue. Table 5 shows the breakeven prices needed to achieve the same Net Return as sugarbeets, but as the price of sugarbeets vary between $45 and $40. The first column, which is based on $45 sugarbeets, shows the same breakeven values shown in Table 4. Again, the input costs used in this analysis are from 2008.

Conclusions

The modified gross margin analysis used in this report provides a simple short-run planning tool for growers to evaluate cropping alternatives. But the analysis is only as good as the underlying price, yield and cost data. The use of the University of Idaho’ s crop costs and returns estimates (enterprise budgets) provides a consistent base for making these comparisons. It should not be considered as an appropriate analysis for every grower, however. The analysis presen ted here does accurately depict the situation that growers faced in making cropping decisions for 2008 and helps explain why some growers opted not to grow sugarbeets. The analysis also shows that with the higher expected price of sugarbeets, at least for 2009, and the falling grain and forage prices, sugarbeets can compete with most alternative crops. The analysis is limited, however, to those crops for whic h the University of Idaho currently has a crop costs

### and returns estimate. Growers may have other more viable cropping alternatives, but ones for which the University of Idaho does not have an enterprise budget.

Growers interested in running their own analysis can download the Excel spreadsheet that was used to create the tables presented in this report. There is an enterprise budget for each crop shown in this analysis, with a detailed listing of inputs, quantities and prices. These are similar to the sugarbeet enterprise budgets shown in the appendi x of this report for the three production regions of southern Idaho. These enterprise budgets are automatically linked to the tables shown in this report. The Excel spreadsheet should be available in January 2009 at the Agricultural Economics and Rural Sociology Department’s web site http://www.ag.uidaho.edu Click on Resources and then Crops.

### Table A-1. Eastern Idaho crop prices used in the analysis. 12/13/2008

Crop 2008 Projected 2009
Sugarbeets $40.00 $45.00
Potatoes: In-weight $5.95 $8.00
Potatoes: Storage $6.75 $9.00
Feed Barley $10.00 $6.00
Malting Barley $16.00 $12.50
Hard Red Spring Wheat $9.50 $6.00

Soft White Wheat $8.00 $5.25
Alfalfa Hay $152.00 $142.00

Potato prices are pre-seasn contract prices for process potatoes, not fresh market.
Note: Alfalfa hay is a blended price, based on 30% feeder quality and 70% dairy quality.

2008 2009 Dairy Quality $170 $160
Feeder Quality $110 $100

$152 $142

Prices shown here are linked to the gross margin and breakeven sheets, but not to the individual crop budgets. Prices in the crop budgets can be changed without impacting the crop comparisons.

Tab A-1 Prices University of Idaho AERS DeptTable A-2. Eastern Idaho: Upper Snake River Valley. Gross margins summary and return to land, irrigation system, overhead & management by crop.Crop prices are for 2008.RURSugarbeetsPotatoes: InweightPotatoes:StorageFeedBarleyMaltingBarleyWheat:HRSWheat:SWSWheat:SWWAlfalfaHayton cwt cwt cwt cwt bu bu bu tonYield33 345 345 63 58 105 110 120 6Price$40.00 $5.95 $6.75 $10.00 $16.00 $9.50 $8.00 $8.00 $152.00Gross Revenue$1,320 $2,053 $2,329 $630 $928 $998 $880 $960 $912Total Operating Expenses$918$1,642 $1,749 $395$384$431 $401 $408 $420Gross Margin$402$411$579 $235 $544 $567 $479 $552 $492Equipment Ownership Costs $190$243$354 $34$34 $35 $34 $36 $10Net: Return to Land, IrrigationSystem, Overhead &Management$211$169$226 $201 $510 $532 $445 $516 $482Note: Values are linked to other spreadsheets in this file. Changes must be made to the individual spreadsheets, not to this summary sheet, which is locked.Commodity prices should be changed in the prices sheet (tab) and expenses should be changed in the individual crop worksheets.Operating and equipment ownership expenses are from 2008.Ownership costs for most crops (except sugarbeets & potatoes) are low because all harvesting is done by a custom operator.12/13/2008Tab A-2 Gross Margin - 2008University of IdahoAERS DeptTable A-3. Eastern Idaho: Upper Snake River Valley. Gross margins summary and return to land, irrigation system, overhead & management by crop.Crop prices are for 2009.RURSugarbeetsPotatoes: InweightPotatoes:Storage Feed BarleyMaltingBarleyWheat:HRSWheat:SWSWheat:SWWAlfalfaHayton cwt cwt cwt cwt bu bu bu tonYield33 345 345 63 58 105 110 120 6Price$45.00 $8.00 $9.00 $6.00 $12.50 $6.00 $5.25 $5.25 $142.00Gross Revenue$1,485 $2,760 $3,105 $378 $725 $630 $578 $630 $852Total Operating Expenses$918$1,642 $1,749 $395$384$431 $401 $408 $420Gross Margin$567$1,118 $1,356 -$17 $341 $199 $177 $222 $432Equipment Ownership Costs $190$243$354$34$34 $35 $34 $36 $10Net: Return to Land, IrrigationSystem, Overhead &Management$376$876 $1,002 -$51 $307 $165 $143 $186 $422Note: Values are linked to other spreadsheets in this file. Changes must be made to the individual spreadsheets, not to this summary sheet, which is locked.Commodity prices should be changed in the prices sheet (tab) and expenses should be changed in the individual crop worksheets.Operating and equipment ownership expenses are from 2008.Ownership costs for most crops (except sugarbeets & potatoes) are low because all harvesting is done by a custom operator.12/13/2008Tab A-3 Gross Margin - 2009University of IdahoAERS DeptSensitivity analysis: Eastern IdahoRURSugarbeetsPotatoes: InweightPotatoes:Storage Feed BarleyMaltingBarleyWheat:HRSWheat:SWSWheat:SWWAlfalfaHayYield 33 345 345 63 58 105 110 120 6Price $45 $8.00 $9.00 $6.00 $12.50 $6.00 $5.25 $5.25 $142Gross Margin $1,485 $2,760 $3,105 $378 $725 $630 $578 $630 $852Op. Expense + Mach. Own. Costs$1,109 $1,884 $2,103 $429 $418 $465 $435 $444 $430NetReturntoLand,IrrigationSystem,Overhead and Mngt.$376Price Required to Equal Sugarbeet NetReturn to Land, etc., Given the Yield, $6.55 $7.19 $12.78 $13.69 $8.01 $7.37 $6.84 $134Price and Expenses Shown Above.Analysis is based on 2008 operating and machinery ownership expenses and the crop yields shown above.Note: The yield, price and expense values shown above are linked to Gross Margin - 2009 Sheet. Do not make changes directly to this sheet.Make changes in the Prices sheet or the individual crop budget sheets, which will change the Gross Margin - 2009 sheet and this one as well.12/13/2008Table A-4. Prices for alternative commodities needed to equal the 2009 projected net return to sugarbeets of $376 per acre for Eastern Idaho, which is basedon $45 per ton sugarbeets.Tab A-4 BreakevenUniversity of IdahoAERS Dept

### $45 $44 $43 $42 $41 $40 Crops Potatoes: In-weight $6.55 $6.46 $6.36 $6.26 $6.17 $6.07 Potatoes: Storage $7.19 $7.09 $6.99 $6.90 $6.80 $6.71 Feed Barley $12.78 $12.26 $11.73 $11.21 $10.69 $10.16 Malting Barley $13.69 $13.12 $12.55 $11.98 $11.41 $10.84 Wheat: HRS $8.01 $7.70 $7.38 $7.07 $6.76 $6.44 Wheat: SWS $7.37 $7.07 $6.77 $6.47 $6.17 $5.87 Wheat: SWW $6.84 $6.56 $6.29 $6.01 $5.74 $5.46 Alfalfa Hay $134 $129 $123 $118 $112 $107

Note: values used in this calculation are from Table 4. The only price that varies is that of sugarbeets. If prices are below the values shown, the grower is better off growing sugarbeets at the price specified. These values are not linked to other sheets and will not automatically recalculate.

12/14/2008 Sugarbeet Price Table A-5. Prices required to achieve the same net return to land, irrigation system, overhead and management as sugarbeets at different sugarbeet prices. Eastern Idaho.

Table A-5 Equivalent University of Idaho AERS Dept

### Quantity Price or Value or Item Per Acre Unit Cost Cost/Acre

Gross Returns RUR Sugarbeets 33 ton $45.00 $1,485.00
Operating Inputs

Seed: $88.46 RUR Beet Seed: Raw 0.45 unit $100.00 $45.00 Technology Fee 0.41 unit $106.00 $43.46

Fertilizer: $216.40 Nitrogen - Preplant 20 lb $0.82 $16.40 P2O5 100 lb $0.70 $70.00 K2O 40 lb $0.50 $20.00 Micronutrients 1 ac $8.00 $8.00 Nitrogen - Liquid 120 lb $0.85 $102.00 $0.00 $0.00

Pesticides: $61.96 Counter 15G L-N-L 14 lb $2.15 $30.10 Roundup Original Max 54 oz $0.55 $29.70 AMS 2.4 lb $0.90 $2.16 $0.00 $0.00 $0.00

Custom & Consultants: $22.50 Custom Fertilize 1 ac $6.50 $6.50 Consultant 1 ac $16.00 $16.00 $0.00 $0.00 $0.00
Irrigation: $86.86 Water Assessment 1 ac $23.00 $23.00 Irrigation Power - CP* 31 acin $1.48 $45.88 Irrigation Repairs - CP* 31 acin $0.58 $17.98 Machinery: $176.82 Fuel - Gas 3.19 gal $3.50 $11.17 Fuel - Diesel 28.55 gal $3.70 $105.64 Lube 1 ac $17.52 $17.52 Machinery Repairs 1 ac $42.50 $42.50

Labor: $115.96 Labor (machine) 6.15 hrs $14.95 $91.94 Labor (irrigation - cp) 1.8 hrs $10.20 $18.36 Labor (other) 0.65 hrs $8.70 $5.66

Other: $119.55 Hauling Charge 33 cwt $2.35 $77.55 Crop Insurance 1 ac $42.00 $42.00 $0.00 Operating Interest @ 7.0% $29.93
Total Operating Costs $918.44 Operating Costs per Unit $27.83
Net Returns Above Operating Expenses $566.56 

### Appendix A-1. 2008 Irrigated Roundup Ready Sugarbeets for Eastern Idaho: Power and Bingham Counties.

EI-Su-08 University of Idaho AERS Dept

### Quantity Price or Value or Item Per Acre Unit Cost Cost/Acre Appendix A-1. 2008 Irrigated Roundup Ready Sugarbeets for Eastern Idaho: Power and Bingham Counties.

Ownership Costs: $4.69 $185.78

$65.00 $275.00

$22.00 $60.00

Total Ownership Costs $612.47 Ownership Costs per Unit $18.56

Total Costs per Acre $1,530.91 Total Cost per Unit $46.39

Returns to Risk -$45.91

Notes:

Breakeven Analysis :

- Base + 10% 10% Yield Price 29.7 33 36.3 Operating Cost Breakeven $30.92 $27.83 $25.30 Ownership Cost Breakeven $20.62 $18.56 $16.87

Total Cost Breakeven $51.55 $46.39 $42.17

Price Yield $40.50 $45.00 $49.50 Operating Cost Breakeven 22.7 20.4 18.6 Ownership Cost Breakeven 15.1 13.6 12.4
Total Cost Breakeven 37.8 34.0 30.9 Management Fee

* Center Pivot. **Includes irrigation system ownership costs. Co-op Stock (Beet share rental value)
Land ** Overhead Tractors & Equipment Insurance Tractors & Equipment Depreciation & Interest Irrigation Equipment Depreciation & Interest

EI-Su-08 University of Idaho AERS Dept

### Table B-1. Southcentral Idaho crop prices used in the analysis. 12/12/2008

2008 Projected 2009
Sugarbeets $40.00 $45.00
Potatoes: In-weight $5.95 $8.00
Potatoes: Storage $6.75 $9.00
Dry Beans $36.00 $30.00
Corn Silage $38.00 $36.00

Field Corn $6.50 $5.50
Feed Barley $10.00 $6.50
Malting Barley $16.00 $12.50
Wheat: Hard Red Spring $9.50 $6.00

Wheat: Soft White $8.00 $5.25
Alfalfa Hay $159.00 $149.00

Potato prices are pre-seasn contract prices for process potatoes, not fresh market.
Note: Alfalfa hay is a blended price, based on 30% feeder quality and 70% dairy quality.

2008 2009 Dairy Quality $180 $170
Feeder Quality $110 $100

$159 $149

Prices shown here are linked to the gross margin and breakeven sheets, but not to the individual crop budgets. Prices in the crop budgets can be changed without impacting the crop comparisons.

Tab B-1 Prices University of Idaho AERS DeptTable B-2. Southcentral Idaho: Magic Valley. Gross margins summary and return to land, irrigation system, overhead & management by crop.Crop prices are for 2008.RURSugarbeetsPotatoes: InweightPotatoes:StorageDry Beans Corn Silage Field CornFeedBarleyMaltingBarleyWheat:HRSWheat:SWSWheat:SWWAlfalfaHayton cwt cwt cwt ton bu cwt cwt bu bu bu tonYield324004002328165 6560105 115 125 7Price$40.00 $5.95 $6.75 $36.00 $38.00 $6.50 $10.00 $16.00$9.50 $8.00 $8.00 $159Gross Revenue$1,280 $2,380 $2,700 $828 $1,064 $1,073 $650 $960 $998 $920 $1,000 $1,113Total Operating Expenses$946$1,874 $2,005$476 $798 $634 $435 $442$467 $442 $469 $544Gross Margin$334$506$695$352 $266 $438 $215 $518 $530 $478 $531 $569Equipment Ownership Costs $183$231$356$68$49 $50 $32 $36 $36 $36 $33 $11Net: Return to Land, IrrigationSystem, Overhead &Management$151$275$339$284 $217 $389 $183 $482 $494 $441 $498 $558Note: Values are linked to other spreadsheets in this file. Changes must be made to the individual spreadsheets, not to this summary sheet, which is locked.Commodity prices should be changed in the prices sheet (tab) and expenses should be changed in the individual crop worksheets.Operating and equipment ownership expenses are from 2008.Ownership costs for most crops (except sugarbeets & potatoes) are low because all harvesting is done by a custom operator.12/13/2008Tab B-2 Gross Margin - 2008University of IdahoAERS DeptTable B-3. Southcentral Idaho: Magic Valley. Gross margins summary and return to land, irrigation system, overhead & management by crop.Crop prices are for 2009.RURSugarbeetsPotatoes: InweightPotatoes:StorageDry Beans Corn Silage Field CornFeedBarleyMaltingBarleyWheat:HRSWheat:SWSWheat:SWWAlfalfaHayton cwt cwt cwt ton bu cwt cwt bu bu bu tonYield324004002328 165 6560105 115 125 7Price$45.00 $8.00 $9.00 $30.00 $36.00 $5.50 $6.50 $12.50$6.00 $5.25 $5.25 $149Gross Revenue$1,440 $3,200 $3,600 $690 $1,008 $908 $423 $750 $630 $604 $656 $1,043Total Operating Expenses$946$1,874 $2,005$476 $798 $634 $435 $442$467 $442 $469 $544Gross Margin$494 $1,326 $1,595 $214 $210 $273 -$12 $308 $163 $161 $187 $499Equipment Ownership Costs $183$231$356$68$49 $50 $32 $36 $36 $36 $33 $11Net: Return to Land, IrrigationSystem, Overhead &Management$311 $1,095 $1,239 $146 $161 $224 -$45 $272 $126 $125 $154 $488Note: Values are linked to other spreadsheets in this file. Changes must be made to the individual spreadsheets, not to this summary sheet, which is locked.Commodity prices should be changed in the prices sheet (tab) and expenses should be changed in the individual crop worksheets.Operating and equipment ownership expenses are from 2008.Ownership costs for most crops (except sugarbeets & potatoes) are low because all harvesting is done by a custom operator.12/13/2008Tab B-3 Gross Margin - 2009University of IdahoAERS DeptSensitivity analysis: Southcentral IdahoRURSugarbeetsPotatoes: InweightPotatoes:Storage Dry BeansCornSilageFieldCornFeedBarleyMaltingBarleyWheat:HRSWheat:SWSWheat:SWW Alfalfa HayYield 32 400 400 23 28 165 65 60 105 115 125 7Price $45 $8.00 $9.00 $30.00 $36.00 $5.50 $6.50 $12.50 $6.00 $5.25 $5.25 $149Gross Margin $1,440 $3,200 $3,600 $690 $1,008 $908 $423 $750 $630 $604 $656 $1,043Op Expense + Mach. Own. Costs$1,129 $2,105 $2,361 $544 $847 $684 $467 $478 $504 $479 $502 $555NetReturntoLand,IrrigationSystem,Overhead and Mngt.$311Price Required to Equal Sugarbeet NetReturn to Land, etc., Given the Yield,$6.04 $6.68 $37.17 $41.34 $6.03 $11.97 $13.15 $7.76 $6.87 $6.50 $124Price and Expenses Shown Above.Analysis is based on 2008 operating and machinery ownership expenses and the crop yields shown above.Note: The yield, price and expense values shown above are linked to Gross Margin - 2009 Sheet. Do not make changes directly to this sheet.Make changes in the Prices sheet or the individual crop budget sheets, which will change the Gross Margin - 2009 sheet and this one as well.12/13/2008Table B-4. Prices for alternative commodities needed to equal the 2009 projected net to sugarbeets of $311 per acre for Southcentral Idaho, based on $45 per ton sugarbeets.Tab B-4 BreakevenUniversity of IdahoAERS Dept

### $45 $44 $43 $42 $41 $40 Crops Potatoes: In-weight $6.04 $5.96 $5.88 $5.80 $5.72 $5.64 Potatoes: Storage $6.68 $6.60 $6.52 $6.44 $6.36 $6.28 Dry Beans $37.27 $35.77 $34.38 $32.99 $31.60 $30.21 Corn Silage $41.34 $40.20 $39.05 $37.91 $36.77 $35.62 Field Corn $6.03 $5.83 $5.64 $5.45 $5.25 $5.06 Feed Barley $11.97 $11.48 $10.99 $10.49 $10.00 $9.51 Malting Barley $13.15 $12.62 $12.09 $11.55 $11.02 $10.49 Wheat: HRS $7.76 $7.45 $7.15 $6.84 $6.54 $6.23 Wheat: SWS $6.87 $6.59 $6.31 $6.03 $5.75 $5.48 Wheat: SWW $6.50 $6.25 $5.99 $5.74 $5.48 $5.22 Alfalfa Hay $124 $119 $115 $110 $105 $101

Note: values used in this calculation are from Table 4. The only price that varies is that of sugarbeets. If prices are below the values shown, the grower is better off growing sugarbeets at the price specified. These values are not linked to other sheets and will not automatically recalculate.

12/14/2008 Table B-5. Prices required to achieve the same net return to land, irrigation system, overhead and management as sugarbeets at different sugarbeet prices. Southcentral Idaho.

Sugarbeet Price

Tab B-5 Equivalent University of Idaho AERS Dept

## Quantity Price or Value or Item Per Acre Unit Cost Cost/Acre

Gross Returns RUR Sugarbeets 32 ton $40.00 $1,280.00
Operating Inputs

Seed: $100.88 RUR Beet Seed: Raw 0.5 unit $100.00 $50.00 Technology Fee 0.48 unit $106.00 $50.88

Fertilizer: $235.00 Liquid Nitrogen 22 lb $0.85 $18.70 Liquid P2O5 75 lb $0.94 $70.50 Dry Nitrogen 110 lb $0.82 $90.20 K2O 60 lb $0.46 $27.60 Sulfur 50 lb $0.40 $20.00 Micronutrients 1 ac $8.00 $8.00

Pesticides: $79.56 Temik 15G L-N-L 14 lb $3.60 $50.40 Roundup Original Max 54.0 oz $0.50 $27.00 AMS 2.40 lb $0.90 $2.16 $0.00 $0.00

Custom & Consultants: $23.50 Custom Fertilize 1 ac $7.50 $7.50 Consultant 1 ac $16.00 $16.00 $0.00 $0.00 $0.00
Irrigation: $106.18 Water Assessment 1 ac $38.20 $38.20 Irrigation Power-CP 33 acin $1.48 $48.84 Irrigation Repairs-CP 33 acin $0.58 $19.14
Machinery: $179.67 Fuel - Gas 2.92 gal $3.60 $10.51 Fuel - Diesel 28.46 gal $3.75 $106.73 Lube 1 ac $17.58 $17.58 Machinery Repairs 1 ac $44.85 $44.85

Labor: $118.44 Labor (machine) 6.04 hrs $14.95 $90.30 Labor (irrigation - cp) 1.65 hrs $10.20 $16.83 Labor (other) 1.3 hrs $8.70 $11.31

Other: $72.60 Crop Insurance 1 ac $39.00 $39.00 Hauling Charge 32 ton $1.05 $33.60 Storage: $0.00 Operating Costs $0.00 Repairs $0.00 Operating Interest @ 7.0% $30.10
Total Operating Costs $945.92 Operating Costs per Unit $29.56
Net Returns Above Operating Expenses $334.08 

## Appendix B-1. 2008 Roundup Ready Sugarbeets, Southcentral Idaho.

SCI-Su-08 University of Idaho AERS Dept

## Quantity Price or Value or Item Per Acre Unit Cost Cost/Acre Appendix B-1. 2008 Roundup Ready Sugarbeets, Southcentral Idaho.

Ownership Costs: $4.61 $178.57

$300.00

$25.00 $22.00 $60.00

Total Ownership Costs $590.18 Ownership Costs per Unit $18.44

Total Costs per Acr e $1,536.11 Total Cost per Unit $48.00

Returns to Risk -$256.11

Notes:

Breakeven Analysis :

- Base + 5% 10% Yield Price 30.4 32 35.2 Operating Cost Breakeven $31.12 $29.56 $26.87 Ownership Cost Breakeven $19.41 $18.44 $16.77

Total Cost Breakeven $50.53 $48.00 $43.64

Price Yield $38.00 $40.00 $44.00 Operating Cost Breakeven 24.9 23.6 21.5 Ownership Cost Breakeven 15.5 14.8 13.4
Total Cost Breakeven 40.4 38.4 34.9 Tractors & Equipment Insurance Tractors & Equipment Depreciation & Interest Irrigation Equipment Depreciation & Interest Land * Co-op Stock Overhead Management Fee

* Includes irrigation system ownership costs.

SCI-Su-08 University of Idaho AERS Dept

### Table C-1. Southwestern Idaho crop prices used in the analysis. 12/16/2008

2008 Projected 2009
Sugarbeets $40.00 $45.00
Potatoes: In-weight $5.95 $8.00
Potatoes: Storage $6.75 $9.00
Dry Beans $36.00 $30.00
Corn Silage $38.00 $36.00

Field Corn $6.50 $5.50
Feed Barley $10.00 $6.50
Malting Barley $16.00 $12.50
Wheat: Hard Red Spring $9.50 $6.00

Wheat: Soft White $8.00 $5.25
Alfalfa Hay $162.00 $152.00

Potato prices are pre-seasn contract prices for process potatoes, not fresh market.
Note: Alfalfa hay is a blended price, based on 30% feeder quality and 70% dairy quality.

2008 2009 Dairy Quality $180 $170
Feeder Quality $120 $110

$162 $152

Prices shown here are linked to the gross margin and breakeven sheets, but not to the individual crop budgets. Prices in the crop budgets can be changed without impacting the crop comparisons.

Tab C-1 Prices University of Idaho AERS DeptTable C-2. Southwestern Idaho: Treasure Valley. Gross margins summary and return to land, irrigation system, overhead & management by crop.Crop prices are for 2008.RURSugarbeetsPotatoes: InWeightPotatoes:StorageDry Beans Corn Silage Field CornFeedBarleyWheat:SWSWheat:SWWAlfalfaHayton cwt cwt cwt ton bu cwt bu bu tonYield385055052230180 62110 125 7.5Price$40.00 $5.95 $6.75 $36.00 $38.00 $6.50 $10.00$8.00 $8.00 $162Gross Revenue$1,520 $3,005 $3,409 $792 $1,140 $1,170 $620 $880 $1,000 $1,215Total Operating Expenses$1,324 $2,398$2,566$388 $908 $734 $447$451 $458 $585Gross Margin$196$606$843$404 $232 $436 $173 $429 $542 $630Equipment Ownership Costs $218$355$515$93$75 $77 $57 $56 $53 $20Net: Return to Land, IrrigationSystem, Overhead &Management-$22$251$328$311 $157 $359 $116 $373 $489 $610Note: Values are linked to other spreadsheets in this file. Changes must be made to the individual spreadsheets, not to this summary sheet, which is locked.Commodity prices should be changed in the prices sheet (tab) and expenses should be changed in the individual crop worksheets.Operating and equipment ownership expenses are from 2008.Ownership costs for most crops (except sugarbeets & potatoes) are low because all harvesting is done by a custom operator.12/30/2008Tab C-2 Gross Margin - 2008University of IdahoAERS DeptTable C-3. Southwestern Idaho: Treasure Valley. Gross margins summary and return to land, irrigation system, overhead & management by crop.Crop prices are for 2009.RURSugarbeetsPotatoes: InWeightPotatoes:StorageDry Beans Corn Silage Field CornFeedBarleyWheat:SWSWheat:SWWAlfalfaHayton cwt cwt cwt ton bu cwt bu bu tonYield385055052230180 62110 125 7.5Price$45.00 $8.00 $9.00 $30.00 $36.00 $5.50 $6.50$5.25 $5.25 $152Gross Revenue$1,710 $4,040 $4,545 $660 $1,080 $990 $403 $578 $656 $1,140Total Operating Expenses$1,324 $2,398$2,566$388 $908 $734 $447$451 $458 $585Gross Margin$386 $1,642 $1,979 $272 $172 $256 -$44 $126 $198 $555Equipment Ownership Costs $218$355$515$93$75 $77 $57 $56 $53 $20Net: Return to Land, IrrigationSystem, Overhead &Management$168 $1,286 $1,464 $179$97 $179 -$101 $71 $145 $535Note: Values are linked to other spreadsheets in this file. Changes must be made to the individual spreadsheets, not to this summary sheet, which is locked.Commodity prices should be changed in the prices sheet (tab) and expenses should be changed in the individual crop worksheets.Operating and equipment ownership expenses are from 2008.Ownership costs for most crops (except sugarbeets & potatoes) are low because all harvesting is done by a custom operator.12/30/2008Tab C-3 Gross Margin - 2009University of IdahoAERS DeptSensitivity analysis: Southcentral IdahoRURSugarbeetsPotatoes: InWeightPotatoes:Storage Dry BeansCornSilageFieldCornFeedBarleyWheat:SWSWheat:SWW Alfalfa HayYield 38 505 505 22 30 180 62 110 125 7.5Price $45 $8.00 $9.00 $30.00 $36.00 $5.50 $6.50 $5.25 $5.25 $152Gross Margin $1,710 $4,040 $4,545 $660 $1,080 $990 $403 $578 $656 $1,140Op Expense + Mach. Own. Costs$1,542 $2,754 $3,081 $481 $983 $811 $504 $507 $511 $605NetReturntoLand,IrrigationSystem,Overhead and Mngt.$168Price Required to Equal Sugarbeet NetReturn to Land, etc., Given the Yield,$5.78 $6.43 $29.51 $38.36 $5.44 $10.83 $6.13 $5.43 $103Price and Expenses Shown Above.Analysis is based on 2008 operating and machinery ownership expenses and the crop yields shown above.Note: The yield, price and expense values shown above are linked to Gross Margin - 2009 Sheet. Do not make changes directly to this sheet.Make changes in the Prices sheet or the individual crop budget sheets, which will change the Gross Margin - 2009 sheet and this one as well.12/30/2008Table C-4. Prices for alternative commodities needed to equal the 2009 projected net to sugarbeets of $323 per acre for Southwesterm Idaho, based on $45 per tonsugarbeets.Tab C-4 BreakevenUniversity of IdahoAERS Dept

### $45 $44 $43 $42 $41 $40 Crops Potatoes: In-weight $6.04 $5.96 $5.88 $5.80 $5.72 $5.64 Potatoes: Storage $6.68 $6.60 $6.52 $6.44 $6.36 $6.28 Dry Beans $37.27 $35.77 $34.38 $32.99 $31.60 $30.21 Corn Silage $41.34 $40.20 $39.05 $37.91 $36.77 $35.62 Field Corn $6.03 $5.83 $5.64 $5.45 $5.25 $5.06 Feed Barley $11.97 $11.48 $10.99 $10.49 $10.00 $9.51 Wheat: SWS $6.87 $6.59 $6.31 $6.03 $5.75 $5.48 Wheat: SWW $6.50 $6.25 $5.99 $5.74 $5.48 $5.22 Alfalfa Hay $124 $119 $115 $110 $105 $101

Note: values used in this calculation are from Table 4. The only price that varies is that of sugarbeets. If prices are below the values shown, the grower is better off growing sugarbeets at the price specified. These values are not linked to other sheets and will not automatically recalculate.

12/30/2008 Table C-5. Prices required to achieve the same net return to land, irrigation system, overhead and management as sugarbeets at different sugarbeet prices. Southwestern Idaho.

Sugarbeet Price

Tab C-5 Equivalent University of Idaho AERS Dept

### Quantity Price or Value or Item Per Acre Unit Cost Cost/Acre

Gross Returns RUR Sugarbeets 38 ton $40.00 $1,520.00

Operating Inputs

Seed: $90.58 RUR Beet Seed: Raw 0.45 unit $100.00 $45.00 Technology Fee 0.43 unit $106.00 $45.58

Fertilizer: $217.90 Dry Nitrogen 100 lb $0.82 $82.00 Liquid Nitrogen 35 lb $0.84 $29.40 Dry P2O5 50 lb $0.83 $41.50 K2O 100 lb $0.57 $57.00 Micronutrients 1 ac $8.00 $8.00 $0.00

Pesticides: $381.11 Telone II 20 gal $11.95 $239.00 Temik 15G 15 lb $3.45 $51.75 Roundup Original Max 54 oz $0.52 $28.08 AMS 2.40 lb $0.90 $2.16 Eptam 7EC 3.70 pints $4.45 $16.47 Treflan 4HFP 1 pints $2.75 $2.75 Tilt 4 oz $2.35 $9.40 Gem 25WG 6 oz $5.25 $31.50 $0.00

Custom & Consultants: $103.00 Custom Fertilize 1 ac $8.50 $8.50 Custom Fumigate - Deep 1 ac $36.00 $36.00 Consultant 1 ac $16.00 $16.00 Custom Air Spray - 5G 1 ac $8.50 $8.50 Custom Sidedress 2 ac $17.00 $34.00

Irrigation: $43.35 Water Assessment 1 ac $40.60 $40.60 Irrigation Repairs - CD* 1 ac $2.75 $2.75 $0.00
Machinery: $203.84 Fuel - Gas 2.5 gal $3.65 $9.13 Fuel - Diesel 30.92 gal $3.80 $117.50 Lube 1 ac $18.99 $18.99 Machinery Repairs 1 ac $58.23 $58.23

Labor: $196.25 Labor (machine) 8.55 hr $14.95 $127.82 Labor (irrigation - cd) 5.6 hr $10.20 $57.12 Labor (other) 1.3 hr $8.70 $11.31
Storage: $0.00 $0.00 $0.00

Other: $24.00 Crop Insurance 1 ac $24.00 $24.00 $0.00 Operating Interest @ 7.0% $64.29
Total Operating Costs $1,324.32 Operating Costs per Unit $34.85
Net Returns Above Operating Expenses $195.68 

### Appendix C-1. 2008 Irrigated Sugarbeets, Southwestern Idaho.

SWI-Su-08 University of Idaho

### Quantity Price or Value or Item Per Acre Unit Cost Cost/Acre Appendix C-1. 2008 Irrigated Sugarbeets, Southwestern Idaho.

Ownership Costs: $5.39 $212.46

$250.00

$12.50 $30.00 $65.00

Total Ownership Costs $575.35 Ownership Costs per Unit $15.14

Total Costs per Acre $1,899.67 Total Cost per Unit $49.99

Returns to Risk -$379.67

Notes:

Breakeven Analysis:

- Base + 10% 10% Yield Price 34.2 38 41.8 Operating Cost Breakeven $38.72 $34.85 $31.68
Ownership Cost Breakeven $16.82 $15.14 $13.76

Total Cost Breakeven $55.55 $49.99 $45.45

Price Yield $36.00 $40.00 $44.00 Operating Cost Breakeven 36.8 33.1 30.1 Ownership Cost Breakeven 16.0 14.4 13.1
Total Cost Breakeven 52.8 47.5 43.2 Tractors & Equipment Insurance Tractors & Equipment Depreciation & Interest Irrigation Equipment Depreciation & Interest Land ** Co-op Stock Overhead Management Fee

* Includes irrigation system ownership costs.

SWI-Su-08 University of Idaho