Financial

Selling Prices

Sunflower profitability greatly depends on selling prices. Sunflowers are typically priced on a hundredweight (cwt.) basis. In 2013, the average U.S. sunflower price for oil markets was $19.20 per cwt. For non-oil markets, the price averaged $31.10 per cwt. Non-oil markets, such as confection or birdseed buyers, typically pay more than oilseed markets. Markets for sunflower are well-established in the Great Plains states, and prices can be followed in USDA reports such as the National Sunflower Summary or the Kansas Sunflower Market Report. Missouri producers are encouraged to discuss pricing and other terms with potential buyers well in advance of production.

Historical Sunflower Prices

Oil Markets (per cwt.)

Source: USDA, NASS

Cost of Production

It is important to understand and evaluate the production costs when assessing a new crop. Sunflowers can be single- or double-cropped during the growing season, and each practice is slightly different in its cost structure. Sunflower production costs are fairly similar to those for growing soybeans. Significant costs include seed, fertilizer, herbicide, insecticide and machinery operations. Farmers can customize the following cost-return budget tool for sunflowers based on their farms’ characteristics.

Sunflower Cost-Return Budget (Missouri)

Crop Insurance

Missouri doesn’t have an established crop insurance policy for sunflowers. However, producers can request coverage for sunflowers through their crop insurance agents, and the USDA – Risk Management Agency will review on a case-by-case basis. Requests must be submitted prior to March 15. Actual sunflower production history from your farm will be used to create a written agreement. If there is not history, a similar crop such as corn or soybeans can establish a baseline production history.

Requesting Insurance Not Available in Your County (USDA-RMA)

Sunflower Seed Crop Policy (USDA-RMA)

Farm Financial Assessment

Farm financial performance and records are important to consider when evaluating a new alternative crop. Past financial performance, current financial condition and the capacity to take on risk influence alternative crop adoption viability. If you need external financing to kick start your entry into alternative crop production, then your lender will likely want to see a good business plan and, if available, financial and production histories.

Financial recordkeeping systems are important for tracking financial performance and making decisions. You can keep records manually through a written system or electronically through a computerized system such as Quicken or Quickbooks. For you to make sound decisions, financial records need to be kept current and accurate.

Information from financial statements and income tax records can measure a farm’s financial position and performance. The balance sheet, statement of cash flows and income statement are three important financial statements. Balance sheets communicate the financial condition of a farming business on a specific day, such as the beginning or end of the year. They share detailed information about a farm’s assets, liabilities and equity. The statement of cash flows (cash in, cash out) shows cash receipts and cash expenditures during a certain time period. The income statement reports the revenue, expenses and profit during a given time period. Historical balance sheets, statements of cash flows and income statements demonstrate how the business has performed. Additionally, these statements can be used to project the business’ future performance. IRS Schedule F and 4797 tax forms are important to existing producers for accurately conducting accrual-adjusted financial analysis.

Key financial measures also help to evaluate a farm’s financial condition. Numerous financial measures can help with evaluating a farm. Usually, these measures tend to look at the profitability, financial efficiency, liquidity and solvency of the business. Examples include return on assets, the operating expense ratio and the debt-to-asset ratio. Lenders typically use a set of key measures when they evaluate loan applicants. Key financial measures can also help with benchmarking your farm relative to other operations. Benchmarking data can be obtained through developing good relationships with other local farmers who are willing to share some of their key financial measures. Alternatively, you may try contacting state recordkeeping business associations, universities or extension services.

Many tools and spreadsheets available online may assist producers in developing financial statements, keeping records and conducting financial analysis. Additionally, accountants, bankers and other business specialists are good resources who may assist with assessing farm financial performance.

For More Information

Measuring and Analyzing Farm Financial Performance (Purdue)

Worksheets for Measuring and Analyzing Farm Financial Performance (Purdue)

Farm Finance Scorecard (Minnesota)

Establishing and Using a Farm Financial Record-Keeping System (eXtension)

Farm Analysis Solutions Tools (FAST) (Illinois)