Costs of Production Have Reached Record Highs

In 2010, it cost IL farmers an average of $4.10 to produce a bushel of corn.

Published on: Sep 19, 2011

Much of the ag media and even farm economists are talking about record income levels for farmers this year.

Unfortuantely, that may not apply to everyone in Indiana and Illinois due to the severe heat and drought. One young farmer told Indiana Prairie Farmer that despite his reasonably solid net worth on paper, without crop insurance this would be his last year of farming. It may not make him whole, but crop insurance will keep him in business. He farms in one of the hardest-hit areas of Indiana, and some of his soils are droughty anyway.

The reason one year could have wiped him out is that production costs are so high. A good way to gauge production costs is to gather information from a large sample of grain farmers, and then study their average costs of production. This would be difficult to do in Indiana since Purdue University discontinued support of the recordkeeping system in Indiana many years ago.

However, the Illinois Farm Business Farm Management Association, with support from the University of Illinois' Extension and Ag Economics Department, still maintains a vibrant program with a large number of cooperators.

The 2011 summary for 2010 was released recently. Based on a sample of grain producers who keep records through the program, specialists calculated average costs of production for both corn and soybeans based on real numbers, as reported by the farmers themselves.

Surprisingly, 2010 was the most expensive year to produce an acre of corn since the study began in 1972. It cost these Illinois farmers $4.30 per bushel to produce corn in 2010. That was up a few cents from production costs in 2009. As far as soybeans go, the cost was the same in 2009 and 2010, at $10.24 per bushel. Both represented the highest cost for producing soybeans ever.

Since there can be wide variation from year to year with changes in weather, yield and prices of inputs, the ag economists also looked at the numbers over a five-year period. For the five-year, 2006 to 2010 average, these farmers spent $3.48 to produce a bushel of corn, and $9.01 to produce a bushel of soybeans.

Obviously, input costs have tracked higher as commodity prices have increased at the same time. To learn more about the farm summary, visit: http://fbfm.org or check out www.farmdoc.Illinois.edu.