This report estimates the typical economic costs and returns to grow alfalfa, wheat, cotton, and sorghum in the area of La Paz County, Arizona. The Arizona Agricultural Enterprise Budgets are estimated based on a representative farm and its related cropping operations in a determined location, numbers are reported on a per unit base.
View the PDF file to access the following crop budgets:
- La Paz Alfalfa Establishment Budget 2024
- La Paz Alfalfa Hay Budget 2024
- La Paz Cotton – Upland Budget 2024
- La Paz Sorghum Grain Budget 2024
- La Paz Wheat – Durum Budget 2024
- La Paz Wheat – Winter Budget 2024
Arizona production budgets can be used as draft templates that can be updated and adapted by using operation-specific numbers and assist with a structured way to store financial information used in day-to-day decision-making processes; when production budgets are updated using operation-specific information, this tool allows forecasting revenues and expenses estimates related to situation-specific farming activities. From an input efficiency point of view, management decisions can be made with better information when there’s a detailed tool where the accounting of production costs is stored. From an output improvement point of view, detailed forecasts on itemized revenues and expenses can lead to finding areas of improvement that can boost the productivity of the resources.
Beginning farmers and established farmers can benefit from the existence of Arizona’s agricultural production budgets; publicly available information on multiple crops allows farmers and other stakeholders to look not only into their area of expertise but also into new potential ventures, based on information about revenues and expenses that can be expected on crops different than the ones they already grow based on typical costs and returns estimated on their local geographic area of interest.
The budget structures presented in this report are inspired and built from the latest data collection efforts by Trent Teegerstrom in 2011, and the latest published Arizona agricultural enterprise reports (Evancho, Ollerton, Teegerstrom, & Seavert, 2023) (Teegerstrom, 1996; 1999), using the Breakeven for New Crop Options (BENCO) model templates. The BENCO model was presented as a tool to evaluate the adoption of new crops into a farming operation with the usage of crop production budgets, allowing the customization of the analysis to different cropping patterns (Ramos-Coronado, Miller, & Bruhn, 2023).
To better represent up-to-date input prices and farming practices, in-person interviews were conducted with the assistance of farmers, farm managers, and/or farming operation decision-makers. The interview materials were the old crop budgets available, and we conducted the interview going line-by-line on items inside those budgets to discuss the relevance of the operation, the quantities and unit prices, outdated information, new practices and inputs, as well as the communication structure of the budget itself.
Cropping pattern
Budgets are based on a 1,500-tillable-acre farm, this is not reflective of any existing operation but a representative operation for the area. The breakdown of crops grown for this representative enterprise is: 675 acres of alfalfa hay in production, 150 acres of alfalfa hay being established, 240 acres of upland cotton, 165 acres of sorghum, 165 acres of durum wheat, and 105 acres of winter wheat. All crops are grown using flood irrigation.
Labor
The general labor cost is $16.50 per hour. Irrigation labor cost is $14.55 per hour. Labor costs include costs associated with social security, workers’ compensation, unemployment insurance, and other labor overhead expenses. Tractor labor hours are calculated based on machinery hours plus ten percent.
Machinery and equipment
Machinery and equipment are assumed to be sufficient for a 1,500-tillable-acre farm. Whole farm machinery costs analysis, as well as operation-specific costs are presented; including estimates for labor, fuel, repairs, and maintenance associated with the usage of the corresponding equipment.
Sensitivity analysis
Each crop production budget presents a sensitivity analysis to approximate profitability scenarios for different returns in terms of yield and price, as well as different scenarios of variable costs. Each sensitivity analysis portrays estimated returns with variances in prices and yield to the magnitude of negative and positive 5%, 10%, and 15% changes with respect to increases and decreases of variable costs to the magnitude of 10%, and 20%. Each budget contains the sections outlined below
- Overview information on representative production unit: Information about the field such as location, irrigation system, previous crop rotation, tillage, and soil information.
- Returns: The return section of the budgets represents the income of the operation, it reflects expected yields and prices for the crop and area of study.
- Variable cash costs: Variable cash costs are broken down into the following categories: land preparation and maintenance, crop production, harvest, and other charges.
- Fixed cash costs: Fixed expenses such as property taxes, and annual cash rent. For this report, we included a $170 land rent cost per crop per acre as a fixed cost associated with each production.
- Fixed non-cash costs: Expenses reflecting an estimated dollar value of the ownership costs related to the required power units, machinery, equipment, and their related depreciation and interest costs.
Updated crop budgets in this document include:
- La Paz Alfalfa Establishment Budget 2024
- La Paz Alfalfa Hay Budget 2024
- La Paz Cotton – Upland Budget 2024
- La Paz Sorghum Grain Budget 2024
- La Paz Wheat – Durum Budget 2024
- La Paz Wheat – Winter Budget 2024
It is recommended that this tool be used as a reference for building and developing other analyses using case-specific numbers for best suitability.
References
Evancho, B., Ollerton, P., Teegerstrom, T., & Seavert, C. (2023). Enterprise Budgets, Southern Arizona: Alfalfa Hay, Cotton Flood, Durum Wheat, Fallow, Silage Corn, and Spring Barley. University of Arizona Cooperative Extension.
Ramos-Coronado, L., Miller, M., & Bruhn, J. (2023). BENCO: Break-Even for New Crop Options Model. University of Arizona Cooperative Extension. NIFA Grant # 2017-68005-26867.
Teegerstrom, T. (1999). Arizona Field Crop Budgets, La Paz County, 1999-2000. University of Arizona Cooperative Extension.
Teegerstrom, T. (1996). Arizona Field Crop Budgets, La Paz County, 1996-1997. University of Arizona Cooperative Extension.