By Alvaro Garcia
This article analyzes the actual cost of production (2017) compared to the projected cost (2018) for corn, soybeans, and wheat in the Northern Great Plains based on figures from the Economic Research Service.
Table 1. Cost of production forecasts for corn, soybeans, and wheat. 2017-2018
| | Corn | | Soybeans | | Wheat | |
| Item | 2017 | 2018 | %
change | 2017 | 2018 | %
change | 2017 | 2018 | %
change |
| Operating Costs: | Dollars per planted acre Operating costs: |
| Seed | 99.63 | 100.82 | 1.01 | 60.63 | 61.36 | 1.01 | 14.40 | 14.58 | 1.01 |
| Fertilizer 1/ | 112.62 | 114.94 | 1.02 | 28.01 | 28.59 | 1.02 | 33.32 | 34.01 | 1.02 |
| Chemicals | 28.12 | 28.77 | 1.02 | 27.54 | 28.18 | 1.02 | 14.53 | 14.87 | 1.02 |
| Custom operations 2/ | 19.77 | 20.13 | 1.02 | 11.03 | 11.23 | 1.02 | 11.28 | 11.49 | 1.02 |
| Fuel, lube, and electricity | 19.70 | 20.16 | 1.02 | 12.56 | 12.85 | 1.02 | 11.27 | 11.53 | 1.02 |
| Repairs | 26.77 | 27.40 | 1.02 | 23.59 | 24.15 | 1.02 | 21.82 | 22.33 | 1.02 |
| Other variable expenses 3/ | 0.14 | 0.15 | 1.07 | 0.06 | 0.06 | 1.00 | 0.70 | 0.72 | 1.03 |
| Interest on operating capital | 1.31 | 2.32 | 1.77 | 0.70 | 1.24 | 1.77 | 0.46 | 0.81 | 1.76 |
| Total, operating costs | 308.06 | 314.69 | 1.02 | 164.12 | 167.66 | 1.02 | 107.78 | 110.34 | 1.02
|
The operating costs of production (seed, fertilizer, chemicals, custom operations, fuel, electricity, repairs and operating capital) show no differences between all three crops and an increase of 1.02 percent between 2017 and 2018. When itemized individually, they will all increase similarly also at around 1 percent with one exception: interest on operating capital. For all three crops interest on operating capital will increase almost by 77 percent on average; corn 1.31 to 2.32 percent, soybeans 0.70 to 1.24 percent, and wheat 0.46 to 0.81 percent. Paying a closer look to total dollar amounts as well as interests paid on borrowed money during the 2018 crop year will thus be of importance to tighten margins. Since corn seed has already been purchased the second greatest impact on operating cost of production is once again fertilizer at almost 1/3 of the total. Use fertilizer rationally based on soil tests and crop requirements; SDSU Extension soil experts can help out from this perspective. For soybeans seed represents the highest expense at almost 36 percent followed by fertilizer and chemicals at roughly 17%; SDSU Extension experts in soil and pest management can also help producers make right, cost effective decisions. Finally, for wheat it is also fertilizer that will weigh the heaviest in operating costs of production at 31 percent of the total.
When analyzing these figures, it becomes clear why SDSU is emphasizing Precision Agriculture as an area of emphasis. Precision agriculture goes beyond the purchasing of high-tech equipment. As mentioned is a toolbox of practices that is combination of information acquired from the field and the response of the crops respond to management practices. The process starts with a soil analysis for nutrient content early in the spring, right before planting. Farmers today can select crop genetics from a wide array of hardy to high-yield, developed to better fit a specific environment. Choosing the right varieties to plant is critical since it is less expensive and momentally sound to adapt the crop genetics to the environment than to modify the latter.