A farm economic module for tactical decisions on sugar beet area

Abstract

For decisions at operational level in sugarbeet growing (for example on plant density, nitrogen fertilizer rate and harvest date), returns above allocated variable costs can be used as a criterion for comparing the economics of different options. For (tactical) decisions on sugarbeet area, the sugarbeet grower has to take into account the opportunity costs of labour and equipment. The paper's calculations are based on the assumption that these can be reflected by the respective allocated fixed costs. Using Dutch farm data for the period 1991-93, a method of allocating fixed costs to crops in the cropping plan is described and included in PIEteR, a bio-economic model for sugarbeet growing. Seed and ware potato and sugarbeet had the highest returns above allocated variable costs, but when allocated fixed costs were also taken into account, sugarbeet appeared to be more profitable than seed potato. When sugar quota were included in the calculations, the returns above allocated variable and fixed costs decreased with sugar yields beyond quota level, because prices of C-beets are lower than those of quota-beets. Growing C-sugar beet was not attractive; wheat growing was more profitable. However, the estimated area required to grow the exact amount of quota-sugar was uncertain with a standard deviation of +or- 10%.