When it comes to planning crop production for the year, producers rely on a mix of resources, including crop guides, crop planners, future contract prices, and a whole host of other inputs. But one thing farmers cannot plan for is the end-of-season return over total expenses, aka profits.
Crop production is unpredictable for several reasons. You could have bad weather, which wipes out part of your crop, stunted growth, unexpected machinery costs, possibly tariffs on your chemical mid-season, or prices just not being what you had hoped. Planning and projections are useful, but until harvest, there is no way to know what is in the bin- or what it is worth.
Planning for the 2024 crop Year
To illustrate just how uncertain and how much risk producers take on, let’s use the very useful and reliable Saskatchewan Crop Planning Guides Online Calculator for 2024 to see the financial impact that yield alone could have on a farm, like Chelsea did when she crunched the numbers of farm startup costs.
For this example, let us look at my childhood- RM 164, Chaplin, SK, in the South West (SW) Region, Census Division 7. The area has brown soil, unlike the preferred dark brown soil to the east.
Let’s assume a farm slightly larger than the average Saskatchewan farm, three full sections of land totalling 1920 acres, with less than 5% unsuitable for seeding. All arable land will be seeded. South West Saskatchewan does not offer ideal or preferable growing conditions for any of the crops listed in the Crop Planning Guide in Saskatchewan, especially canola.
Still, 2024’s future prices for canola were strong, making it a profitable crop despite its lower yield in this region. So I dedicate 625 acres to canola.
Originally, I had considered oats, but looking at the planner’s brown soil zone, I noticed that the breakeven for yield was not likely attainable. The crop planner estimated the area would need a breakeven yield of 60.87 bu/ac, but the estimated yield for brown soil in 2024 was only 53.82 bu/ac. Knowing that my estimated yield was projected as less than my breakeven, and my return over total expenses would be -$37.03/acre, oats were too risky. Instead, I went with crops whose breakeven yield didn’t exceed projected yields, splitting the remaining acres into 610 of durum and 620 acres of large green lentils.
Calculating expenses
The Crop Planning Guides Calculator works by letting producers input both estimated revenues and expenses. For revenues, you enter acres seeded, estimated yield (which we will cover later), and the estimated on-farm market price, which I took straight from the calculator since I didn’t have a contract lined up for selling any of these crops.
Then there are the expenses, calculated on a per-acre basis. Since I am not a farmer in real life, I stuck with the suggested agronomic inputs for each crop across Saskatchewan’s soil zones to represent the variable expenses, as seen in Table 1. Each crop’s variable expenses varied:
- Canola had the highest input costs per acre at $357.70/acre
- Lentils and durum were at least 20% less, at $282.19 and $265.04/acre.
Each crop has a different distribution of costs. Durum seed costs are significantly less than the other crops, and its herbicide inputs were lower as well. Lentils require fewer fertilizer inputs, as these legumes are nitrogen fixers, yet they have higher plant protection costs than the other two crops. This is partly because lentils are susceptible to a host of diseases, often needing multiple fungicide applications to prevent economic damage, and they are also less competitive against weed competition early on, increasing herbicide costs.
Table 1 2024 estimated SK expense per acre
For all crops planted, “other expenses” from the calculator were included, such as building repairs, property taxes, overhead, investments in machinery, building and land, and the depreciation of assets. These costs were consistent across all three crops at $135.41/acre. I did not include the cost of labour or management. Let us pretend that in this example, it can be handled by one super producer. In reality, there are Saskatchewan farmers this size managed and run by only one person.
Planned profits
With all the numbers plugged into the calculator—yield estimates, pricing, and expenses—it seemed like the farm was on track to turn a profit in 2024 (Table 2).
Table 2 Revenue per acre for brown soil zone, 2024
Using the suggested yield and price for brown soil (taken directly from the calculator), the farm’s gross revenue looked promising. But profits aren’t just about revenues, expenses have to be factored in, too. By removing the variable and other expenses from total revenue (gross revenue*acres seeded), each crop came out profitable, as shown in Table 3, resulting in just over $235,000 of profits. Of this, lentils accounted for 61% of total profits, and expenses only accounted for 64% of the revenues earned. Comparatively, canola and durum both experienced expenses that accounted for 85% of their revenues, contributing only $50K and $40K to the overall return over expenses.
Table 3 Farm Totals for Brown Soil Zone, 2024
At first glance, things looked good. But that’s not the full story—because, as always, reality tends to throw unexpected twists into a producer’s plans.
The likely payout
Those projected profits were based on the crop planners’ estimates, not the actual harvest results. The question is, would the payout really be as large in reality?
If the brown soil yield estimates from the Crop planner were higher than what farmers actually experienced in the South West Crop region of Saskatchewan, would profits take a hit? Using the October 21, 2024, Provincial Estimated Crop Yields, the actual yields turned out to be lower than the estimated brown soil yields. This meant revenues were lower too, as shown in Table 4.
Table 4 Revenue per acre for SW region, 2024
Keeping expenses constant from before, the farm would have ended with losses instead of profits. Lentils would have remained profitable, but canola and durum wouldn’t have yielded enough to cover their costs. Come harvest, this farmer would have lost nearly $40K, instead of the projected six-figure profits estimated in Table 3.
Table 5 Farm Totals for SW Region, 2024
So what went wrong? Yield.
With canola and durum yields coming in lower than expected for the southwest region, the farm didn’t produce enough to hit breakeven levels.
Knowing your breakeven
Now, I am not saying that farmers don’t know what to expect from their yields; many have a strong grasp of what their land can produce. But this exercise illustrates a crucial point, that even small changes of a variable, like yield, can make or break profits. Had I factored in variables like a high need for plant protection, hiring custom seeding to meet crop insurance deadlines, or fluctuating market prices, the numbers could have shifted even more. What producers really need to know is their breakeven yield or price that makes the crop profitable at the farm level.
Looking at Table 6, we can see some key differences between brown soil estimates and actual South West region yields. Brown soil estimated yields were higher than the breakeven yields needed, meaning profits were likely. However, the SW region of Saskatchewan saw yields fall short of breakeven, making crops like canola and durum unprofitable.
Table 6 Breakeven Yield, bu/ac or lb/ac
I could have done this exercise with price, but I chose yield to illustrate why farmers need a strong grasp of their expected yields, input costs, and expenses early on, long before the growing season even begins.
Breakeven Crop Planning
At the end of the day, I am not a farmer. But what I do know is that even with the best possible planning, farming is still a high-risk game. All it takes is a hailstorm to reduce acres and force a likely small insurance payout, or for resistant weeds to lower lentil yields and cut into profits. And this doesn’t even factor in hired labour, global trade and those questionable tariffs, or the off-farm expenses such as trucking, rail, receiving a lower grade for your crop, or other off-farm fees like cleaning or demurrage on your contract.
Farming is a choice, but there’s no denying the economic risk involved. When the plan and the payout don’t align, it must be tough on the business and the producer.
