Cost of Production for South Dakota Corn, Soybeans and Wheat During 2018 Back »

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 more environmentally sound to adapt the crop genetics to the environment than to modify the latter.

Once planting starts variable seeding rates can be used across a field that can also be accompanied with different fertilizer recommendation (variable rate application: VRA) according to soil test results. In modern planting equipment, the farmer can pre-program this variable seeding rate. After the plants emerge the fields are scouted searching for problems (i.e. weeds, pests, etc.) which are loaded into a GIS which then compares it to other data. Through the results of these periodic evaluations the farmer decides if the specific site requires application of variable rate of chemicals. This functionality of precision agriculture is critical since it permits to use the right amounts of chemicals at the right locations within a field which results not only in savings, but also in less environmental impact.

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