Cost of Producing Corn and Soybeans04/23/2018
In 2017, the total of all economic costs per acre for growing corn in Illinois averaged $876 in the northern section, $868 in the central section for farmland with “high” soil ratings, $845 in the central section for farmland with “low” soil ratings, and $806 in the southern section. Soybean costs per acre were $636, $655, $609 and $616, respectively (see Table 1). Costs were lower in southern Illinois primarily because of lower land costs. The total of all economic costs per bushel in the different sections of the state ranged from $3.82 to $4.77 for corn and from $9.63 to $11.41 for soybeans. Variations in this cost were related to weather, yields, and land quality.
These figures were obtained from farm business records kept by farmers enrolled in the Illinois Farm Business Farm Management Association. The samples included only farms with more than 500 acres of productive and nearly level soils in each area of the state; these are farms without livestock. Farms located in the 22 counties north and northwest of the Illinois River are included in the sample for northern Illinois.
Farms from 36 counties below a line from about Mattoon to Alton are in the sample for southern Illinois. The remaining 44 counties make up the sample for central Illinois. The sample farms averaged 1,432 tillable acres in northern Illinois, 1,399 acres in the central section with high soil ratings, 1,381 acres in the central section with lower soil ratings, and 1,640 acres in southern Illinois.
Cost of Production for Corn Compared to 2016
Costs per bushel of corn in 2017 as compared to 2016 were slightly higher in northern and central Illinois with the higher rated soils but lower in the other geographic areas of the state. Costs per bushel were higher in some areas due to higher overhead costs as well as lower yields. Costs per bushel were lower in other areas due to lower fertility and higher yields. Costs per bushel were 3 cents higher in northern Illinois, 1 cent higher in central Illinois with the higher rated soils, 5 cents lower in central Illinois with the lower rated soils and 14 cents lower in southern Illinois.
The average corn yield in 2017 was 4 bushels per acre lower than 2016 in northern Illinois, 1 bushel lower to 2 bushels higher in central Illinois and 6 bushels higher than 2016 in southern Illinois. The 2017 average corn yield in the different geographical locations ranged from 3 bushels lower to 16 bushels per acre higher than the five-year average from 2013 to 2017.
Costs per acre were mostly unchanged in all the different geographic regions in Illinois compared to 2016. Across the state, total costs per acre to produce corn varied from a 1 percent decrease to a 1 percent increase. Fertility and land costs decreased while drying, and nonland interest costs increased.
Cost of Production for Soybeans Compared to 2016
Production costs per bushel of soybeans in 2017 increased in all areas of the as compared to 2016. Costs per bushel increased due to higher pesticide costs and lower yields. Soybean yields were lower when compared to the year before. Soybean yields ranged from 1 to 7 bushels per acre lower in 2017 compared to 2016. Changes in costs per bushel ranged from 18 cents higher in central Illinois with higher rated soils to $1.11 higher in northern Illinois.
Total costs per acre decreased in northern and central Illinois with lower rated soils while total costs increased in the other geographic regions of the state when compared to 2016. Costs decreased $2 per acre in northern Illinois and central Illinois with the lower rated soils while costs increased $4 per acre in central Illinois with the higher rated soils and $13 per acre in southern Illinois. Average soybean yields in the different areas ranged from 2 bushels lower to 3 bushels per acre higher than the five-year average from 2013 to 2017.
Total costs to produce corn for all combined areas of the state were $856 per acre. This figure was similar to the year before. Variable costs decreased $6 per acre or 1 percent, other nonland costs increased $8 per acre, and land costs decreased $5 per acre. In 2017, cash costs accounted for 46 percent of the total cost of production for corn, other nonland costs were 29 percent, and land costs were 25 percent.
The average corn yield for all combined areas of the state was 216 bushels per acre resulting in a total cost of production of $3.96 per bushel. The average corn yield was the highest on record. Total costs per acre were the lowest in the last six years while total costs per bushel were the lowest in the last nine years.
Total cost per acre to produce soybeans increased, from $633 per acre in 2016 to $637 per acre in 2017. Pesticides, nonland interest, and overhead costs accounted for most of the increase. Variable costs accounted for 32 percent of the total cost of production for soybeans, other nonland costs 34 percent and land costs 33 percent. The average soybean yield for all combined areas of the state was 62 bushels per acre resulting in a total cost of production of $10.27 per bushel. The average soybean yield was the second highest on record. The cost per bushel to raise soybeans the last five years averaged $10.68 per bushel.
Forecasts for Illinois production costs in 2018 look to be less using Gary Schnitkey’s 2018 crop budgets and the USDA’s Cost-of-Production Forecasts as a guide. For corn, 2018 variable costs are projected to decrease 2 percent, mainly due to soil fertility costs. For 2018, soybeans have a larger projected decrease of variable costs of 4 percent. This decrease is also primarily due to soil fertility costs. With tightening margins, these decreases are needed. However, additional cutting of overhead and land costs will need to occur to make returns more profitable in 2018.
The author would like to acknowledge that data used in this study comes from the local Farm Business Farm Management (FBFM) Associations across the State of Illinois. Without their cooperation, information as comprehensive and accurate as this would not be available for educational purposes. FBFM, which consists of 5,500 plus farmers and 60 plus professional field staff, is a not-for-profit organization available to all farm operators in Illinois.
FBFM field staff provide on-farm counsel with computerized recordkeeping, farm financial management, business entity planning and income tax management. For more information, please contact the State FBFM Office located at the University of Illinois Department of Agricultural and Consumer Economics at 217-333-5511 or visit the FBFM website at www.fbfm.org.
A more complete discussion of how some of the costs are calculated can be found here under Illinois Farm Management Handbook in the management section of farmdoc.
Source: University of Illinois