Saturday, August 13, 2016

GMO vs NonGMO: 2015 Cost of Production Update

This is an update of my earlier blog entitled “GMOvs NonGMO: The Cost of Production. Earlier this year when the National Academies of Science announced their Genetically Engineered Crop Study, and questioned some of the yield benefits, I tweeted that I would update this blog. Yesterday, I got a call from Michigan State University asking for the update because they were reviewing it with a group of foreign agriculturalists who wanted “real world” data from a real farmer. So that is my impetus for updating this blog. We are between crops right now so I had the time to push the numbers for 2015.

When asked about “why we chose this…” or “why we did that…” there are nuances to farming decisions that I don’t think non-business owners understand because they don’t have experience working for themselves and trying to make a business sustainable in every sense of the word – environmentally, socially and economically. You can’t have one without the other or the word is meaningless. The choice to purchase seed is driven by not only the traits that the seed has but also the diversification of not putting all your eggs in one basket so to speak. Choosing different varieties of corn or soybeans, some with and some without GM traits is one of those means to spread risk, be a steward of the traited technology, and reduce the risk of herbicide/insecticide resistance. But the bottom line is we can only grow what we have a market for. If there is a demand for high oleic soybeans and there is a grain elevator in our region paying a premium for that trait, we’d be foolish not to tap into that market. We can’t grow what there isn’t local infrastructure and market to support. The best example for our farm is growing canning tomatoes. We only grow canning tomatoes because there is a cannery in Pennsylvania that provides the harvester and the transportation to get the tomatoes to the cannery. Growing around 100 acres per year of tomatoes means that a half million dollar harvester for tomatoes would never cash flow if we had to buy it ourselves, nor would we ever afford the number of tractor trailer trucks needed to haul the volume of tomatoes to the cannery. The contract only makes sense because the infrastructure is provided for us to be able to grow tomatoes successfully.

The remainder of the text below is from my earlier 2014 blog with updated numbers in the charts to reflect our 2015 production and costs figures. Is it a perfect analysis? No. But for us these numbers help us determine year to year what performed well and how to make purchase and growing decisions for the next year based on overall performance. A family farm isn't sustainable if it isn't profitable. As I have said many times, what is the incentive for the next generation to return to the farm if the farm is in debt up to their eyeballs, operating in the red. Living on a farm is a lifestyle but is also has to provide a livable income for children to want to return and take over.
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"Recently I was asked to answer a question on GMO Answers regarding what the productions costs are comparing GMO and nonGMO crops. For my family farm, that specifically means corn or soybeans. The hay including alfalfa, tomatoes, green beans, and grapes have not been genetically engineered, they are "conventional" or traditional hybrids from other means of plant breeding.

Answering the question in terms of costs necessitates the entire picture of yield and price per bushel, otherwise a farmer would have an incomplete picture by which to make business decisions that impact the sustainability of the family farm. The other critical piece that folks don't seem to grasp is the market demand in various regions. Farmers grow what there is demand for, plain and simple. What markets are available in our region and the products they want from farmers. Economics 101. We don't grow what we can't sell. For us, there is greater demand for GMO derived feed and imgredients than there is for nonGMO feed and ingredients. Strange isn't it? You haven't heard that before have you? The media would lead you to believe otherwise, but the media aren't connected to the farm community or its markets. If you are believing only what you read in the media, then you are not seeing the entire picture, just a very small slice of their pie, so to speak.

The data below is our data, no one else's data. We can't make sustainable business decisions based on hypotheticals or someone else's data. We make decisions for our farm based on our outcomes and experiences. These figures are not everyone else's figures. These figures do not extrapolate to our neighbors or farmers in other regions or states. These figures are what drives our decision making and choices for the coming year. If the market changes, we change our decision making process. If yield or costs change, we change our decision making process. In the end, our goal is to have healthy soils producing healthy foods and have a sustainable family farm to leave for the next generation.


Will Rogers is credited with the quote: "The farmer has to be an optimist or he wouldn't still be a farmer."  Optimistically, each winter we review our harvest data comparing our crop yield by variety to our cost of production for that crop that season, in consideration of the type of growing season we had, in order to decide what seeds to purchase for the coming season.

Since 1998, we have been growing both GM and non-GM corn and soybeans. (We don’t actually use the term “GM” or “GMO” since all domesticated crops have been genetically modified, but am using the acronym for the sake of this audience). We run the numbers ever year for every variety and every crop because that’s the only way to run any successful business. We collect the data on what worked and what didn’t work and make changes and improvements or what many businesses call “continuous quality improvement.”





2014 & 2015 Corn Production Non-Irrigated

Cost Per Acre
2014
NonBt/HT Corn
2015 NonBt/HT Corn
2014
BT/HT corn

2015
Bt/HT corn
Seed
$65
$65
$114
$121
Fertilizer
$123
$102
$123
$102
Herbicide/Insecticide
$40
$35.50
$21
$25
Crop Insurance
$40
$26
$40
$26
Fertilizer Application
$7.50
$7.50
$7.50
$7.5
Planting
$28
$20
$28
$20
Nitrogen Application
$9.50
$10
$9.50
$10
Pesticide Application
$18.00*
$18
$9.00
$9
Harvest
$28.00
$28
$28.00
$28
Hauling
$25.00
$25
$25.00
$25
Drying
$60
$59
$60
$59
Land Rent
$150
$150
$150
$150
Total Cost of Inputs
$594/ac
$546
$615/ac
$582.50
BPA=bushels per acre
186 BPA
138 BPA
221 BPA
164 BPA
Current cash price/bu
(Salisbury, MD)

$4.01

$4.04

$4.01

$4.04
Gross Income/ac
$745.86
$557.52
$886.21
$662.56
Net Income Difference

$151.86

$11.52

$271

$80.06





*higher costs due to additional spraying

2014 & 2015 Soybean Production Full season, Non-Irrigated

Cost Per Acre
2014
Non-GMO for Food

2015
NonGMO for Food
2014
GMO High Oleic

2015
GMO High Oleic
Seed
$41
$38
$53

$60
Fertilizer
$21
$18
$21

$18
Herbicide
$40
$28.50
$18

$18.50
Crop Insurance
$32
$26
$32

$26
Fertilizer application
$7.50
$7.50
$7.50

$7.50
Planting
$20
$20
$20

$20
Pesticide application
$24
$28
$18

$18
Harvest
$28
$28
$28

$28
Hauling
$18
$18
$9

$9
Land Rent
$150
$150
$150

$150
Total Cost of Inputs
$372.50
$362
$356.50

$355
Bushels/Ac (BPA)
35 BPA
34 BPA
55 BPA

45 BPA
Price/Bushel
$12.25
$11.76
$11.25

$10.26
Gross Income
$472.5
$423.36
$619

$461.70
Net Income Difference
$100
$61.36
$263

$90.70
(2015 Update: Different from the 2014 data, I removed “GMO for Feed, & GMO for Seed” as we grew neither in 2015. Additionally, hauling costs for nonGMO were increased due to the fact that they are in storage longer and require smaller, more frequent trips to a seed cleaner, are bagged and sold by the pallet rather than by the tractor trailer load)

The first year we planted Bt corn was 2000. As you can see from the chart below, it has out-performed conventional corn every single year. What is most noteworthy however, is the importance of its performance in unfavorable growing years.  We had drought conditions from 2010-2012. A healthy crop is a more productive crop and in bad years, that can make the biggest difference to the financial sustainability of the family farm. I previously had included our organic corn data in this chart but have since removed it. We grew conventional, biotech, and organic corn simultaneously but stopped our organic production in 2011. It average was below 50 bushels per acre and makes a very poor comparison. We decertified our organic ground and for that reason, I no longer include the data.

Corn (non-irrigated)
2000
2004

2010
(slight drought)


2011
(drought & hurricane)

2012
(drought)
2013
2014



2015
Biotech  Acres
10
276
573
397
464
290
275

450
Avg Yield BPA
171
182
110
44
111
214
220

164
Conventional Acres
647
415
195
213
261
75
200

150
Avg Yield BPA
165
167
91
18
57
202
186

138
Biotech/Bt
Yield Advantage
6.4
15
19
26
54
12
34

26
Price/Bu
$2.35
$2.55
$5.18
$6.47
$7.40
$4.41
$4

$4.04
Net income difference
Due to yield
$15.04
$38.25
$98.42
$168.22
$399.60
$53
$136

$105.04

Likewise in our soybean production history, we have consistently experienced a better yield in our GM soy over our non-GM soy. We grow four “classes” of soy: soy for food, soy for feed, soy for seed, and a specialty GM bean High Oleic (HO) acid beans. The HO beans go for feed but the oil that is extracted is used in baking and frying which eliminates the trans-fatty acids from using hydrogenated soybean oil as an ingredient. These beans are kept segregated and true to their variety in order to have the highest quality HO oil from the extraction process.

Soybeans (dryland)
1998
2000
2005
2010
(slight drought)
2011
(drought
& hurricane)
2012
(drought)
2013
2014

2015
Biotech Acreage
195
322
416
270
522
527
200
300

400
Yield bu/a
54.2
50.3
53.5
46
37
43
48
55

45
Conventional Acreage
156
184
213
306
750
675
175
100

200
Yield bu/a
48.2
43.2
46.3
36
34
36
25
35

34
Yield Difference
6 bu
7.1 bu
7.2 bu
10 bu
3 bu
7 bu
23
20

11

Price/Bushel
$6.90
$6.62
$7.25
$11.30
$12.52
$14.55
$13.55
$11.25

$10.26
Income Difference/
Acre
$41.40
$47.00
$52.20
$113.00
$37.56
$101.85
$312
$225

$113

Even when there is a premium involved with growing a non-GM grain, due to better yields, GM has out-performed non-GM on our farm every year. We have experienced higher yields in all of our GM crops in the nearly 17 years we have been using the seeds. We grow what we have market access to sell in our region. Our choice to buy seed is based on the success of various seeds we have tried and well as University research conducted in our area. We don’t pay much attention to data that comes from other growing regions in the US because it generally isn’t relevant to the conditions we experience. We use a “prove it” mentality in that we will give a seed a try on a limited number of acres and do our own compare and contrast to our other fields. Our decision making is balanced by diversity of the markets we can access, the demand within those markets, and the productivity that we have seen for ourselves to justify which type of seeds to plant each and every year.

As I said at the beginning, these are our costs and our production figures. Don't assume they are the same for all farmers. They are not.



10 comments:

  1. Thank you so much for putting up that real world data! Would you mind if I made some bar charts from this for use on posts? BTW love those images of grapevines leafing out in spring

    ReplyDelete
    Replies
    1. Hi Steve, you are welcome to make some charts from this data. And I'm getting ready to seed crimson clover again this year in the vineyard for next year's cover crop :)
      Jennie

      Delete
  2. I took the liberty to translate it into French here:

    http://seppi.over-blog.com/2016/08/ogm-c-non-ogm-mise-a-jour-sur-les-couts-de-production-de-2015-dabs-ube-ferme-etats-unienne.html

    ReplyDelete
  3. I like sun flowers farmer. But you must look this one open

    ReplyDelete
  4. Excellent article on how farming can be found in a good way to fertilize the land, due to residues from the buckwheat and peas, let it and long processes, but the nutrients coming into the earth. But it is worth noting that none of farming is not without galvanized bucket.

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