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Managing in-season crop costs

By Staff | Jun 27, 2017

The 2017 crop profit margins will be tight with the likelihood of burdensome supplies of corn and soybeans. Producers will need to stay focused on new crop marketing plans and take advantage of futures price rallies due to weather related uncertainties.

What about managing crop costs? Being meticulous with data entries and tracking specific crop related costs in-season (while the crop is growing) will likely prove invaluable. A good recordkeeping system with timely entries will allow you to keep track of costs by crop, by farm field and crop rotation. Knowing these numbers on a year-to-year basis is key to knowing when, where and how best to make crop related management decisions in-season.

ISU crop cost estimates

Each January, Iowa State University Extension economists release their crop cost estimates for a variety of row crop rotations. These numbers reflect the best guess of average cost of purchased inputs and a return to land and labor resources (production). However, these estimates do not provide a margin for pro?t, a return to management or costs of grain storage. The ISU crop cost estimates re?ect production costs only.

Let’s look at two different crop rotations that consider conventional tillage practices. Corn production following soybeans will yield approximately 180 bushels and with total costs of $631 per acre. Soybean production following corn will yield approximately 50 bushels with total costs of $483 per acre. In both of these crop rotations, land costs are expressed as cash rent equivalent and reflects roughly 35 percent and 48 percent of the total crop costs for corn and soybean production, respectively.

Now add another fixed cost: machinery. While this cost can vary greatly by farming operation, it typically represents between 9 percent and 12 percent of the total costs for corn and soybean production in Iowa. So, two fixed costs-cash rent equivalent (land) and machinery-account for roughly 45 percent to 50 percent of the total typical crop production costs. Managing these two costs by farm, field and even crop rotation are critical to determine your actual cost of production. When you divide these total crop costs by your final yields, you can determine your breakeven costs.

In-season crop input decisions

During the summer months row crops are growing rapidly, but the final yield hasn’t yet been determined. Timely producer decisions around the various variable costs (fertilizer and crop protection) along with the impact of weather will ultimately determine the final breakeven costs. Now add in your cash marketing decisions, this will impact whether you can make a profit on this year’s crops.

You will still have to make input-related decisions often with short notice. The key is to manage these decisions without negatively impacting your final yield. The goal is not just cutting costs, but making input decisions that can still lead to profitable yields. Here are 5 timely in-season management tips to consider:

-Scout fields regularly to detect nutrient, weed, insect and pest related concerns to potentially minimize losses early.

-Reduce field passes of machinery and equipment to the areas of the field where the problem occurs.

-Use in-season digital field maps to later compare yield and fertility data.

-Use variable rate technology to help reduce field overlaps, products applied, fuel and labor.

-Assess crop yield potential before making rescue operations (nitrogen, herbicides, insecticides, fungicides, etc.) and use good farming practices as required for crop insurance coverage.

The timeliness of data collection and recordkeeping entries in-season may have a large impact on 2017 costs and yields. Longer-term, these decisions, along with a good recordkeeping system, timely entries and digital maps by farm, field and crop rotation can prove invaluable.

Steve Johnson is an Iowa State University Extension farm management specialist. Contact him at sdjohns@iastate.edu.

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