Corn Agronomy

Where science meets the field

Thursday, December 12, 2013

January, 2001
Field Crops 28.6-30

# How Much Does It Cost To Produce An Acre Of Corn?

Joe Lauer, Corn Agronomist

Farmers need to manage nutrients and pesticides carefully to both avoid adverse effects on the environment and to reduce costs of purchased inputs. But farmers also must maintain a production level that will result in profitable returns. How many farmers know what their inputs are, let alone their costs per acre or per bushel? It is hard to trim costs if you donâ€™t know your inputs.

One source of data is the UW Agronomy PEPS (Profits through Efficient Production Systems) contest for corn and soybean farmers. Since 1987 a total of 1,358 farmers have participated in the PEPS contest. Profit groups were determined by ranking contestants in quintiles by division, district and year.

The largest proportion of costs involve land, fertilizer and fixed + variable equipment (Fig. 1). In the cash corn division, the average cost per acre has been \$238 (minimum = \$215 during 1995; maximum = \$260 during 1992). In the livestock corn division, the average cost per acre is \$206 (minimum = \$186 during 1993; maximum = \$235 during 1987). Average cost per bushel has been between \$1.25 and \$1.95 in the cash corn division and \$1.13 and \$1.81 in the livestock corn division.

Corn seed costs have increased 74% since the inception of the contest in 1987. Fertilizer costs have not changed over time, but varies up to 120% depending upon year. The variability is mostly due to the way in which fertilizer costs are calculated using yield level and consequent P and K removal rates. Variable equipment costs have increased 30%.

Total acre cost of production between the top and bottom profit group is similar, but grower return is not, due to substantially higher yield (Fig. 2 and Table 1). Better efficiency (lower cost per bushel) occurs with higher yields.

 Table 1. Farmer production and cost for the top 20% and bottom 20% profit groups in PEPS (1987-1999). Cash corn Livestock corn Top 20% Bottom 20% Top 20% Bottom 20% Grain yield (bu/A) 182 144 177 130 Grain moisture (%) 21.0 22.8 22.9 24.5 Acre cost (\$/A) \$224 \$248 \$190 \$203 Bushel cost (\$/bu) \$1.25 \$1.79 \$1.09 \$1.61

Acre cost difference between top and bottom profit groups is \$13-24/A (Table 1). Top corn farmers produce 38-47 bu/A more than the bottom group. Top corn farmers have 1.6-1.8% lower grain moisture. Farmers in the top profit group tend to use land with lower yield potential, rotate more frequently, plant about 3 to 6 days earlier, and make 0.3-0.5 fewer trips across the field.

PEPS costs underestimate actual costs because not all inputs are accounted for completely. Costs reflect only what can be documented. It is difficult to accurately measure all indirect, incidental, and overhead costs associated with a farm system (a reasonable figure to add is 20-30%).

"Best of the Best" aptly describes the farmers participating in PEPS. Results reflect the efforts and costs of the best farmers growing corn on the best land available. The required 10-acre contest field is usually placed on the best soils / fields of the farm and managed optimally. Lower yielding fields are often not entered into the contest. Thus, costs are probably higher for most farmers.

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