This year's projected return for corn after corn is $156 above average, according to the University of Illinois Extension Farmdoc Web site (www.farmdoc.uiuc.edu).
The projected soybean return is $67/acre above average. Both figures are based on central Illinois high-productivity farmland using projected 2007 prices of $3.80/bu. corn and $8/bu. soybeans; yields of 170 bu./acre (corn) and 55 bu./acre (beans); and $25/acre of direct payments.
Total non-land costs used were $338/acre for corn and $249 for soybeans. Costs include crop insurance premiums of $32 for corn and $18 for soybeans (a Crop Revenue Coverage [CRC] policy at an 85% coverage level).
Using these budgets, operator and farmland return is $338/acre for corn and $249/acre for soybeans. Between 1995 and 2005, operator and farmland return averaged $182/acre across all crops.
The difference between the corn and soybean returns is $89/acre ($338 corn return, $249 soybean return). Between 2001 and 2005, the difference in profitability between corn and soybeans averaged $20/acre. Hence, the $89/acre estimate is $66 above average.
A hypothetical 1,000-acre farm moving from two-thirds corn to all corn will increase expected profits by $29,726 (334-acre increase in corn times $89 higher projected returns for corn).
The study was conducted by Gary Schnitkey, a University of Illinois Extension farm financial management specialist. He notes that this $89 difference in profitability can have large impacts on profitability across farms planting various mixtures of corn and soybeans. However, there are also risks involved in opting for the all-corn strategy.
The Corn-Soybeans Rotation Tool available at www.farmdoc.uiuc.edu/fasttools/index.asp helps you evaluate the profitability of specific situations.
