March 20, 2008
COST TO PRODUCE CORN AND SOYBEANS IN ILLINOIS - 2007
In 2007 the total of all economic costs per acre for growing corn in Illinois averaged $563 in the northern section, $554 in the central section for farmland with “high” soil ratings, $526 in the central section for farmland with “low” soil ratings, and $484 in the southern section. Soybean costs per acre were $441, $427, $394 and $366, respectively (see Table 1). Costs were lower in southern Illinois primarily because of lower land costs. The total of all economic costs per bushel in the different sections of the state ranged from $2.76 to $3.34 for corn and from $7.58 to $9.89 for soybeans. Variations in this cost were related to weather, yields, and land quality.
These figures were obtained from farm business records kept by farmers enrolled in the Illinois Farm Business Farm Management Association. The samples included only farms which had no livestock and had more than 500 acres of productive and nearly level soils in each area of the state. Farms located in the 22 counties north and northwest of the Illinois River are included in the sample for northern Illinois. Farms from 36 counties below a line from about Mattoon to Alton are in the sample for southern Illinois. The remaining 44 counties make up the sample for central Illinois. The sample farms averaged 1,212 tillable acres in northern Illinois, 1,240 acres in the central section with high soil ratings, 1,291 acres in the central section with lower soil ratings, and 1,472 acres in southern Illinois.
Cost of Production for Corn Compared to 2006
Costs per bushel of corn in 2007 as compared to 2006 were higher for all geographic areas of the state except for the central region with the higher rated soils. Costs per bushel were higher due to higher per acre costs. Costs per bushel were 2 cents lower in central Illinois with the higher rated soils, 4 cents higher in central Illinois with the lower rated soils, 13 cents higher in northern Illinois and 23 cents higher in southern Illinois.
The average corn yield in 2007 was 13 bushels per acre higher than 2006 in northern Illinois, 17 to 21 bushels higher in central Illinois and 1 bushel per acre higher in southern Illinois. The 2007 average corn yield in the different geographical locations ranged from 4 bushels per acre lower to 19 bushels per acre higher than the four-year average from 2004 to 2007.
Costs per acre were higher in all the different geographic regions in Illinois compared to 2006. Across the state total costs per acre to produce corn increased 8 to 12 percent. A number of costs increased, including fertilizer, seed, fuel, repairs, insurance and land costs. The nonland interest cost per acre was one of the items that increased the most due to higher grain inventory values and more capital investment into machinery.
Cost of Production for Soybeans Compared to 2006
Production costs per bushel of soybeans in 2007 increased in all areas of the state as compared to 2006. Costs per bushel increased mainly due to higher per acre costs. Soybean yields were the same for central Illinois but lower for northern and southern Illinois when compared to the year before. Soybean yields ranged from 11 bushels per acre lower to no change in 2007 as compared to 2006. Increases in costs per bushel ranged from 64 cents in central Illinois with the lower rated soils to $2.79 in southern Illinois.
Like corn, total costs per acre increased in all geographic regions of the state compared to 2006. Costs increased $54 per acre in northern Illinois, $41 per acre in central Illinois with the higher rated soils, $33 per acre in central Illinois with the lower rated soils and $25 per acre in southern Illinois. Fertilizer, fuel, repairs, seed and interest were some of the costs that increased. Average soybean yields in the different areas ranged from no difference to 9 bushels per acre lower than the four-year average from 2004 to 2007.
Total costs to produce corn for all combined areas of the state were $542 per acre. This figure increased 11 percent compared to the year before. Variable costs increased $22 per acre, or 10 percent, other nonland costs increased $21 per acre and land costs increased $11 per acre. In 2007, cash costs accounted for 44 percent of the total cost of production for corn, other nonland costs were 30 percent, and land costs were 26 percent. The average corn yield for all combined areas of the state was 190 bushels per acre resulting in a total cost of production of $2.85 per bushel. The average corn yield was the highest on record. The 2004 corn yield was 184 bushels per acre and the 2003 and 2006 corn yields were 174 bushels per acre. Total costs per acre were the highest on record. Even with the high corn yields, total costs per bushel were the second highest since 1998. The highest cost per bushel during that time period was $3.05 in 2005.
Total cost per acre to produce soybeans increased, from $375 per acre in 2006 to $418 per acre in 2007. Generally speaking, the same expenses that increased for corn also increased for soybeans. Variable costs accounted for 32 percent of the total cost of production for soybeans, other nonland costs 34 percent and land costs 34 percent. The average soybean yield for all combined areas of the state was 51 bushels per acre resulting in a total cost of production of $8.20 per bushel. The average soybean yield was the lowest since 2003. The highest yield on record of 54 bushels per acre was recorded in 2004. The cost per bushel to raise soybeans the last five years averaged $7.31 per bushel.
The author would like to acknowledge that data used in this study comes from the local Farm Business Farm Management (FBFM) Associations across the State of Illinois. Without their cooperation, information as comprehensive and accurate as this would not be available for educational purposes. FBFM, which consists of 5,500 plus farmers and 60 professional field staff, is a not-for-profit organization available to all farm operators in Illinois. FBFM field staff provide on-farm counsel with computerized recordkeeping, farm financial management, business entity planning and income tax management. For more information, please contact the State FBFM Office located at the University of Illinois Department of Agricultural and Consumer Economics at 217-333-5511 or visit the FBFM website at www.fbfm.org .
A more complete discussion of how some of the costs are calculated can be found under enterprise costs in the management section of farmdoc.
Issued by: Dale Lattz, Department of Agricultural and Consumer Economics