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ARS Home » Southeast Area » Dawson, Georgia » National Peanut Research Laboratory » Research » Publications at this Location » Publication #175314
Title: IMPACT OF COMMODITY PRICE ON PROFITABILITY IN IRRIGATED AND NON-IRRIGATED CROPPING SYSTEMS IN THE SOUTHEAST

Author
item Lamb, Marshall
item Rowland, Diane
item Sorensen, Ronald - Ron
item Butts, Christopher - Chris

Submitted to: American Peanut Research and Education Society Abstracts
Publication Type: Abstract Only
Publication Acceptance Date: 5/15/2004
Publication Date: 12/4/2004
Citation: --

Interpretive Summary: None required.

Technical Abstract: In simplest terms, net returns in crop production can be defined as (yield multiplied by price) minus cost of production. Proper management of each of these variables (yield, price, cost) is essential to ensure the profitability of a crop during a production season. Further, farm managers must also consider these variables within the scope of a cropping system and the longer-term impact on profitability of potential cropping systems. To address the impact of irrigated and non-irrigated cropping systems profitability, a large-scale irrigation research project was established in CY 2001. Six replicated irrigated and non-irrigated cropping sequences including peanuts, cotton, and corn were defined as: continuous peanuts (PPP), cotton/peanuts/cotton (CPC), corn/peanuts/corn (MPM), cotton/cotton/peanuts (CCP), and cotton/corn/peanuts (CMP). Irrigation scheduling (timing and amount) for peanut was managed by the Irrigator Pro expert system. Irrigation scheduling for cotton and corn was based on the recommended water curves and application amount schedules in the University of Georgia crop production guides for cotton and corn. Production costs (defined as total cost per acre consisting of variable and fixed cost) were obtained from crop year 2003 University of Georgia crop enterprise budgets. Three price levels for corn, cotton, and peanuts were defined as low, median, and high. The Farm Security and Rural Investment Act of 2002 established a loan price for corn, cotton, and peanuts providing a minimum price for each commodity even in periods of depressed commodity prices. Thus, the loan rate prices define the low prices while the high price was defined as the higher of the average annual market price received by farmers during the 1990-2003 crop years or the target price defined by The Farm Security and Rural Investment Act of 2002. The median price is defined as the simple average of the low and high price for each respective crop. The profitability of each irrigated and non-irrigated cropping system for each potential crop price combination was calculated.