By Alejandro Plastina and Ann Johanns
Farmers can estimate the cost of producing various crops in 2024 by using data published in the January edition of Ag Decision Maker.
The article “Estimated Costs of Crop Production” includes average production costs for corn, corn silage, soybeans, alfalfa and pasture maintenance. Decision tools are also available that allow farmers to enter their own numbers, so they can estimate production costs on their own farm.
Production costs are always important to know in advance of planting season, but even more so as the crop market heads into a period of tighter profit margins.
“The economic outlook for 2024 is somewhat of a return to normal, where prices are roughly in line with production costs and profits can be captured sporadically throughout the year,” said Alejandro Plastina, associate professor in economics and economist with Iowa State University Extension and Outreach.
Plastina said the report shows a 5-7% decline in the cost of corn and soybean production, driven by lower input costs compared to 2023. Land cost is projected to be stable, with increases in labor and machinery costs.
The report provides estimates for specific crop rotations, including corn following corn, corn following soybeans and corn following silage. The report lists specific costs commonly associated with each crop, including seed, fertilizer, machinery use and labor.
Machinery costs reflect both new and used equipment, and are up 23%, based on the increase from 2020 to 2022, reported by the USDA Economic Research Service.
Due to differences in soil condition, the quantity of inputs used and other factors, production costs will ultimately vary from farm to farm, said Plastina. Labor is treated as a fixed cost in the report, because most labor on Iowa farms is supplied by the operator, family or permanent hired labor.
Starting in 2023, projected land costs used in the report are based on a survey of Iowa State Farm Management Team members.
Historical estimates of Iowa crop production are also available in the Ag Decision Maker, dating back to 2000.
Farm bill decisions
Other important tools are also available in the January Ag Decision Maker, including decision tools to help farmers select the appropriate farm bill program. Options include Price Loss Coverage and Agricultural Risk Coverage, with options for individual farm coverage or county-level coverage. The tools help farmers analyze and select the best option for their own operation.
Plastina said the deadline to select a farm bill program with the USDA Farm Service Agency for 2024 is March 15. The current farm bill has been extended through Sept. 30.
Source : iastate.edu