Today, we will address the topic of how we direct seed our crop rotations. Our crop rotations are selected according to proven agronomic practice subject to six major considerations specific to our farm operation. Our presentation discusses the planning which enters into our crop rotation decision-making as well as emphasizing the practical elements of equipment modifications for residue management in direct seeding. The first consideration in our crop rotation planning is profitability. Although we might like to include a specific crop in our rotation, if in any particular year, we expect that crop not to be relatively profitable with respect to alternative crops, then we may adjust the crop acreage accordingly for that year.
Profitability analysis is comprised of planning and information collection.
We keep abreast of current cropping and marketing information through attending courses and seminars, visiting trade shows, and collecting reading material for our extensive farm library. Financial information derived from the farm account records is translated into costs of production for each crop type on a per acre and per bushel basis. Direct input costs such as seed, fertilizer and chemical are attributed to each specific crop whereas indirect costs such as wages, insurance and utilities are averaged over the whole farm. Building and equipment amortization estimates are derived from Repair and Replacement Planning Schedules in which we target a replacement year and an estimated replacement value for each building and item of equipment. Having a good handle on our costs of production for each crop puts us in a good position to analyse projected market prices and determine crop profitability.