Profit through Efficient Production Systems

February 21, 2002   9(2):12-13

Joe Lauer, Corn Agronomist

This year marks the 15th year of the Wisconsin PEPS program. The PEPS program is one of the oldest running programs of its kind in the U.S. It goes beyond typical yield contests by encouraging efficiency and profitability rather than productivity alone.

The objectives of the program are:

1. To recognize the practices utilized by the most profitable growers and to provide other growers, educators, and researchers insight into ways these producers integrate practices into a system, and

2. To emphasize soil and water conservation, efficiency, profitability and competitiveness vs. productivity alone.

During 2001, 68 contestants entered 109 fields. The average yield in the cash corn, dairy/ livestock corn and soybean divisions was 176, 177 and 50 bushels per acre with production costs of $240, $217 and $169 per acre. These costs include actual figures provided by contestants. These costs do not include all costs of production. For example, grain handling, hauling and storage costs are not charged. Also, overhead or miscellaneous costs associated with operating a farm (i.e. field tiling, outfitting a shop, plowing snow, maintaining fences, taxes, desktop work related to management, etc.), are difficult to determine among farms, and is not accounted for in the PEPS program. Typical overhead rates range from 18-46% of production costs, so $30 to $110 per acre should be added to the above production costs per acre.

Differences between Top 20% and Bottom 20% profit groups in PEPS (1987-2001).
  Cash Corn Livestock Corn Soybean
  Top 20% Bottom 20% Top 20% Bottom 20% Top 20% Bottom 20%
Acre Cost ($/A) $223 $249 $192 $207 $173 $191
Grain yield (bu/A) 184 146 180 133 61 44
Bushel cost ($/bu) $1.23 $1.77 $1.08 $1.61 $2.86 $4.61
Grain moisture (%) 20.6 22.5 22.5 24.1 12.7 12.9

Slight acre cost differences ($15 to $26) are observed between top and bottom profit groups. Also, slightly higher grain moisture is seen in bottom profit group (0.2 to 1.9 %). The largest difference between profit groups is yield (38 to 57 bu/A for corn and 17 bu/A for soybeans). Profit group differences can be attributed to many "intangible" or "invisible" management decisions such as timeliness, fewer trips, crop rotation, earlier planting date, reduced tillage, reduced chemical costs, and hybrid or variety selection.

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