Production costs for 2012 spring crops will be higher and margins are estimated to be smaller than this year.  Input costs for the major spring crops are running 10 to 15 percent higher than 2011. The volatile crop and input price requires attention to detail to reach profit goals.

Corn production costs for 2012 are estimated to be 13 to 15 percent higher. Soybean costs 14 to 16 percent and spring wheat 10 to 12 percent. Fertilizer and land rent costs are two of the input costs with the largest increase.  These two inputs combine to make up 40 to 50 percent of expected gross revenue for each of the spring crops. Fertilizer and rent are followed by equipment costs at 18 to 20 percent and seed at 10 to 13 percent making up the top four input costs and accounting for 70 to 80 percent of gross revenue.

To help manage these expected tighter margins in 2012 use good agronomic practices.  Know your farm and its land production history.  What is your yield and costs for continuous corn?  If you experience yield drag for corn on corn you may want to stay with a rotation.  Use soil tests and appropriate yield goals for your farm.  A good guideline yield goal for corn is to use a 5 year Olympic average plus 10 to 15 percent.  The Olympic average takes the past five years and throw the high and low divided by 3, add the 10 to 15 percent for improved genetics.

Know your lands capabilities.  A flexible cash lease is something to consider in managing thru the volatile crop and input prices. This is a challenging risk management environment and commodity producers must work to manage the margin between crop prices and inputs. A crop planning budget is available from SDSU Extension.