Economic Effects of Winter Wheat Production on Farms in the Republic of Serbia in 2006 and 2011

Based on the comparative analysis of gross margins in 2006 and 2011, the economic impact of winter wheat production on farms in the Republic of Serbia was estimated. The subject of the analysis was variable costs for purchased seed, fertilizers, pesticides, and contract harvesting services. Based on the analysis of the gross margin for winter wheat, it was noted that the value of production (VP), total variable costs (TVC) and gross margin (GM) were significantly higher in 2011 than in 2006. In 2011, VP was higher due to a significantly higher yield and the higher price of winter wheat grain. In addition to higher prices of all inputs, the increase in variable costs was mostly influenced by the higher price of fertilizer. Comparing the two time periods in winter wheat production, it was concluded that the value of GM in 2011 increased by 30%.


Introduction
Specificity of agricultural production in the Republic of Serbia is that this production is carried out on family farms.Most of these farms are up to 3 ha in size (60%) (Munćan & Božić 2006).Grains are predominant crops in the sowing structure (52.2%), above all maize followed by winter wheat (ORS, 2011).
Current problems that have been jeopardizing the development of agriculture in the Republic of Serbia were classified by Pejanović & Kosanović (2010) into the following six groups: adverse land owning structure and non-organized farmers; unregulated market of agricultural products; uncompetitiveness; improper role of the government, demographic problems of agricultural population and the global economic crisis.In order to enforce and increase revenue and profit on farms with developed agricultural production, and for choosing the most profitable enterprise, various "tools" are used.Those tools can be used for evaluation of economic effects of enterprises (Lampkin et al. 2011, Popović et al. 2011, Rural Solutions SA 2012, Popescu 2012).
When it comes to field crops production, economic effects are estimated based on the achieved yields and the price of goods on the one side, and production costs on the other side.Economic effects of production for farmers doing exclusively field-crop farming are often estimated based on GM.The value of GM is different from farm to farm, depending of yield, market price, and way of selling field crops, variable costs and size of the farm.In the research of Anđelić et al. (2010), it was sunflower production that had the lowest GM, due to an adverse tendency in sunflower price and input costs.Unlike this research, having analysed GM for nine most important field crop enterprises in Serbia, Janković et al. (2007) determined that winter wheat production had the lowest GM, and it Ratar.Povrt.50 (2013) 36-42 was mostly due to the yield, which is in accordance with the results of Anđelić et al. (2007).
Winter wheat production accounts for 30% of the entire field crops production, which can be explained as a need for optimizing sowing structure and following a crop rotation on farms (Todorović & Munćan 2009).According to Denčić et al. (2009), sown/harvested areas in the Republic of Serbia are decreasing each year, so in 2008, for instance, wheat was estimated to only account for 15% of the sowing structure.In the period 2000-2009, most of wheat production (78%) was obtained on family farms (Todorović & Filipović 2010).Considering that the human population is getting larger and wheat production needs to increase at the rate of 1.5 % per year (Braun et al. 2008), it is important to increase winter wheat production in Serbia, too.Increase in production of winter wheat, traditionally produced on almost all farms in the Republic of Serbia, can be achieved through higher profitability and improved competitiveness.In order to achieve the aforementioned objectives, continuous monitoring and evaluation of economic indicators of winter wheat production are needed.Based on the analysis of economic indicators, it is possible to give recommendations and measures to ensure production profitability.
The objective was to identify and evaluate indicators that determine economic effects of winter wheat production on farms, based on the comparative analysis of GM in 2006 and 2011.In this research variable costs were analysed, namely costs of seed, fertilizers and pesticides, and contract harvesting services.

Materials and Methods
In this research, GM was used as an indicator of economic effects in winter wheat production.The basic parameters were collected through the questionnaire, and farms were chosen by selecting a random sample, having the same farm size and structure as the samples from 2006.In both years, fifty-two farms were analysed, from the territories of agricultural extension offices in Smederevo, Valjevo, Šabac, Požarevac, Jagodina, Kraljevo, Kruševac, Čačak, Loznica, Niš, Leskovac and Zaječar.The research of economic effects of enterprises from Serbian farms in 2006 and 2011 were carried out by the Institute for Science Application in Agriculture, Belgrade in collaboration with the agricultural extension offices.
The following data were used for calculations of the GM basic elements (income and expenses): yield (kg ha -1 ) and product market price (RSD kg -1 ); quantity (kg ha -1 ) and cost of seed (RSD ha -1 ); quantity (kg ha -1 ) and cost of fertilizers (RSD ha -1 ); quantity (l ha -1 ) and cost of pesticides (RSD ha -1 ); and cost of contracted services (harvest, RSD ha -1 ).In reality, it is very difficult to include all the costs, having in mind limited availability of data on variable costs, therefore the research used direct variable costs for calculating GM, i.e. costs of machinery was not taken into account (Anđelić 2010).Based on these data for both years and each farmer, the following economic indicators were calculated: VP, TVC and GM.Microsoft Excel was used for processing data from farm enterprise calculations, calculating an average GM for winter wheat and elements of income and expenses.The average of each calculation element, i.e. a GM element, was envisaged to be calculated.
Based on the comparative analysis, the estimation of the production elements and economic conditions was made.The analysis of the results refers to estimating the share of variable costs and GM in total VP.The structure of variable costs (the share of costs for seed, fertilizers, pesticides and contracted services) was analysed.In the observed period, differences in gross margin elements were estimated based on the analysis of variance (F test), while regression analysis (correlation and determination coefficient) was used to estimate their impact on the gross margin.

Results and Discussion
The analysis of the collected GMs for winter wheat determined that in 2006 yields on selected farms ranged from 1500 to 7143 kg ha -1 , while their minimum and maximum values in 2011 ranged from 3000 kg ha -1 to 6500 kg ha -1 .In 2011, not only was there a significant increase in yield, but a significantly higher price of wheat grain was also noted, compared to 2006.Market price of wheat grain in 2006 ranged from 7.2 RSD kg -1 to 10.0 RSD kg -1 , and in 2011 from 17.00 to 20.00 RSD kg -1 .Due to the aforementioned yields and prices of winter wheat in 2011, the selected farms achieved a significant increase in VP of winter wheat.Having analysed the average values of production and other GM indicators, higher average price and yield were determined due to a significant increase in VP of winter wheat, while in 2011 there was a significant increase in TVC due to higher production costs (Table 1).
In 2011, despite higher variable costs, a higher VP led to a significantly higher GM for winter wheat than it was in 2006.That is to say, GM in 2011 was three times higher than in 2006 or 2.5 times higher when it is converted in EUR (Figure 1).Using a more detailed cost analysis for fertilizers, it was determined that in 2011 on average lower quantities of fertilizer were used, while the absolute value was due to the higher price of fertilizer (it was almost two times higher, on average).It was also ascertained that all elements of variable costs had higher prices than in 2006 (Table 2).Having analysed GM in the period of 2005-2009, Munćan et al. (2010) ) ascertained that in winter wheat production in AP Vojvodina the share of fertilizer costs was dominant in TVC.Analysing the results of this research, the dominant share of fertilizer costs in TVC was also confirmed for the entire territory of  the Republic of Serbia.As for the other elements of variable costs, it was ascertained that the share of seed costs was slightly higher and the share of pesticide costs almost the same as in 2006, while the share of costs of contract harvesting service was lower in 2011 (Figures 2 and 3).
Based on the significance of the aforementioned indicators, in the observed period a high positive correlation was found between the yield (that is VP of winter wheat) and the GM value, while a low negative correlation was found between TVC and GM (Table 3).

Table 2 .
Structure of variable costs and VP of winter wheat in the Republic of Serbia, 2006 and 2011 Tabela 2. Struktura varijabilnih troškova i VP ozime pšenice u Republici Srbiji, 2006.