Economic Analysis of Sugarcane Variety Selection, Crop Yield Patterns, and Ratoon Crop Plow Out Decisions

Abstract

Sugarcane (Saccharum sp. hyb.), a true perennial, is planted with the intention of harvests over several years before replanting a new crop. The success of a sugarcane farming operation depends on the ability to produce good stands of plantcane and maintain suitable stands for ratoon crops. With profit maximization as a primary goal of a farming operation, economic information relative to the expected net returns from sugarcane production over entire crop cycles is needed in making variety selection and ratoon crop harvest/plow out decisions. In this study, net present value methods are used to develop an economic model that can be used to estimate the economic returns from the production of early maturing varieties of sugarcane grown under the restrictive harvest conditions found in Louisiana. Sugarcane yield data by variety and crop-year were obtained from advanced variety trials conducted at 10 locations across Louisiana harvested from 1990 through 1994 for 10 commercial sugarcane varieties. Results of this study suggest that net returns associated with sugarcane varieties vary significantly across varieties. Fallow and planting costs per harvested acre can be lowered by extending the standard crop cycle to harvest of a third ratoon crop. However, minimum third ratoon yields to justify harvest will depend upon the expected third ratoon yield of the current variety planted, as well as expected crop cycle yields of alternative varieties available for planting. Research Question The success of a sugarcane farming operation depends on the ability to produce good stands of plantcane and maintain suitable stands for ratoon crops. Variety development research results provide growers with current information concerning the agronomic characteristics of existing and newly released sugarcane varieties. However, due to the perennial nature of sugarcane production, economic returns from the planting of a sugarcane crop are generated by harvests over several years. With profit maximization as a primary goal of a farming operation, economic information relative to the expected net returns from sugarcane production over entire crop cycles is also needed in making variety selection and ratoon crop harvest/plow out decisions. Literature Summary Earlier work on sugarcane production in the West Indies documented the economic importance of, and developed weights for, secondary sugarcane variety characteristics. This research quantified the relationship of factors such as erectness of stalk, uniformity of stalk height, and germination to the profit from sugarcane production. Approximately 85% of the harvested sugarcane acreage in the USA is located in Florida and Louisiana. Sugarcane varieties, growing conditions, and cultural practices in these two states are significantly different. A conceptual model of the stubble replacement decision for sugarcane production in Florida has been developed. Yield prediction equations were estimated and integrated into a decision model of the stubble replacement problem for sugarcane varieties grown in Florida. This procedure was adapted in Florida as a method of selecting clones based upon economic evaluation in the Florida sugarcane breeding program. No information is available that compares the economic returns from sugarcane production or evaluates ratoon crop harvest/plow out decisions for the early maturing sugarcane varieties grown in Louisiana under restrictive harvest conditions. Study Description In this study, net present value methods are used to develop an economic model that can be used to estimate the economic returns from the production of sugarcane varieties over an entire crop cycle. The model is used to evaluate economic returns across varieties and locations in Louisiana as well as to examine the feasibility of extending an existing crop cycle to include harvest of a third ratoon crop. Data on sugarcane yields by variety and crop year were obtained from advanced variety trials conducted at 10 locations across Louisiana harvested from 1990 through 1994 for 10 commercial sugarcane varieties. Applied Questions How does crop cycle length affect net returns? Annualized net returns of varieties grown for a 3-yr cycle (fallow, plantcane, first ratoon crops) averaged $96.48/acre ($71.17 to $169.18/acre across varieties) compared with a 4-yr cycle (fallow, plantcane, first ratoon, second ratoon crops) average returns of $141.49/acre ($101.16 to $236.76/acre across varieties). Longer crop cycles spread fallow and planting costs among more harvested acres, thereby lowering fallow and planting costs per harvested acre. Do varieties vary significantly in their ratoon crop yield pattern? Louisiana commercial sugarcane varieties evaluated in this study varied in their yield decrease percentages between crops, but much of the pattern differences could be attributed to a few varieties. Yield decreases between plantcane and first ratoon crops averaged 7.4% (0.9% to 12.5% across varieties), decreases between first ratoon and second ratoon crops averaged 10.8% (3.7 to 18.7% across varieties), and decreases between plantcane and second ratoon crop averaged 17.3% (6.7 to 25.4% across varieties). Does the ratoon crop yield pattern affect profitability? Different simulated patterns of yield decrease between crops with the same average yield effected little change in profitability. Profitability differences among varieties was much more a function of average yielding ability across crop years than the pattern of crop-year yields. Recommendation Results of this study suggest that sugarcane crop cycle net returns were higher, on average, for 4-yr crop cycles (harvest through second ratoon crop) than for 3-yr crop cycles (harvest through first ratoon crop) for sugarcane varieties produced under the restrictive harvest conditions of Louisiana (Table 1). Fallow and planting costs per harvested acre can be lowered by extending the standard crop cycle to harvest of a third ratoon crop. Minimum third ratoon yields to justify harvest will depend upon the expected third ratoon yield of the current variety planted as well as expected crop cycle yields of alternative varieties available for planting. Table 1. Average sugar yields and annualized net returns for 3- and 4-yr crop cycles for 10 Louisiana sugarcane varieties, 1991–1994. Minimum Sugar yield† TR yield Annualized net return to justify Variety PC FR SR Mean harvest‡ 3-yr cycle 4-yr cycle ------------- lb sugar/acre ---------- ------- $/acre ------- CP 65-357 6450 5647 4815 5637 3765 71.17 104.26 CP 70-321 6273 5568 4933 5591 3737 63.26 101.16 CP 72-370 6426 6114 4970 5837 3908 86.58 120.01 CP 74-383 6518 5862 5334 5905 3950 80.57 124.57 CP 79-318 6673 6355 5700 6243 4184 102.09 150.32 LCP 82-89 6571 6145 5411 6042 4047 91.85 135.17 LHo 83-153 6541 6110 5481 6044 4049 89.80 135.37 LCP 85-384 7594 7523 7085 7401 4971 169.18 236.76 HoCP 85-845 6881 6250 6016 6382 4274 104.51 160.15 LCP 86-454 6849 6286 5280 6138 4108 104.85 141.84 Mean 6679 6187 5521 6129 4104 96.48 141.49 LSD0.05 392 449 484 348 287 22.28 26.02 † PC = plantcane crop; FR = first ratoon crop; SR = second ratoon crop; TR = third ratoon crop. ‡ Assumes PC, FR, and SR yields of same variety would be obtained if replanted, and TR costs and cane sugar concentration equal to SR costs and cane sugar concentration.