Crop profitability becomes more elusive

Reading Time: 2 minutes

Published: November 16, 2017

Pulse crop prices have gone to heck in a hand basket. Lentils have been under serious price pressure, and now India has announced its 50 percent tariff on peas, effectively barricading our number one market.

At harvest time, the price for red lentils was soft at around 21 cents a pound. Now, the price has slipped to the 17 cent a lb. range.

Saskatchewan Agriculture is reporting an average lentil yield of 1,369 lb. per acre. At current prices, red lentils are generating a gross return of only $232 per acre, scarcely covering variable expenses for most producers, let alone fixed costs.

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Large green lentil prices have dropped dramatically, but are still profitable. At harvest time, a No. 2 large green lentil was worth around 43 cents a lb. Now that same lentil is worth about 32 cents.

Applying the same average yield of 1,369 lb. an acre, large green lentils at current prices generate a gross return of $438 an acre, enough to pay variable costs and fixed costs and still generate a net return.

There’s no telling where the price of peas will end up with India out of the market. The initial shock from the massive tariff may have produced an overreaction in the market, but yellow peas are currently being quoted at around $6 a bushel.

The average pea yield in the province is pegged at 33 bu. an acre, generating just $198 an acre. Like red lentils, yellow peas are now deeply unprofitable.

For 2018, one would expect a large drop in pea and red lentil acreage. Large green lentils and some other lentil classes will see an acreage increase, but the market for those classes has limitations. There’s a distinct possibility they will be overproduced.

There will also be more interest in kabuli chickpeas than at any time in the past decade. Prices for large calibre chickpeas are riding high, and profitable contract prices exist for 2018.

However, planting seed is expensive, and along with its high potential reward, the crop also carries high risk. Chickpeas are generally considered a viable option in only the traditionally driest regions of southern Saskatchewan and Alberta.

When you examine the oilseed crops, there are winners and losers.

While soybeans have become a staple in Manitoba, they struggled to be profitable in most areas of Saskatchewan this year.

The latest provincial yield estimate has soybeans averaging only 18 bushels an acre. Even with a price of $11 a bu., an average soybean crop just barely covers its variable costs.

Flax, with an average yield of 21 bu. per acre and a price in the range of $12.50 a bu., covers its variable costs with some left over to apply to fixed costs.

The provincial average canola yield of 34 bu. an acre combined with a price around $11.40 a bu. makes canola profitable. Equally profitable are yellow and brown mustard.

The average mustard yield was a mere 746 lb. an acre because of the crop’s concentration in the most drought-affected region of the province.

However, yellow and brown mustard prices have risen to the 42 cent a lb. range.

The provincial average yield and current prices means cereal crops (wheat, durum, barley and oats) cover variable costs but struggle to cover a typical farm’s fixed cost per acre.

The pricing picture will continue to evolve as spring approaches, but profitable cropping options could be elusive next year.

About the author

Kevin Hursh

Kevin Hursh

Kevin Hursh is an agricultural commentator, journalist, agrologist and farmer. He owns and operates a farm near Cabri in southwest Saskatchewan growing a wide variety of crops.

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