What is in this article?:
- Crop Returns Growing as Production Costs Rise
- Prices to pay
Farmers will spend more to produce their 2011 crops but they're likely to make that up – and then some – from higher grain prices, say two Purdue University Extension specialists.
Which crops farmers choose to plant this season also will play a factor in the returns they'll earn, say Craig Dobbins and Bruce Erickson of Purdue's Department of Agricultural Economics. The numbers suggest a corn-soybean rotation is the best choice, with double-crop soybeans/wheat a good option for farmers living in areas where that cropping system is viable.
"At this point in time, contribution margins – the difference between gross revenue and production costs – are really quite large," Dobbins says. "If one is looking for a place to expend energy from now until you can get out into the field and plant, I think one ought to focus that energy on protecting the margin that you've got in crop production today."
Dobbins, Erickson and fellow Extension specialists in Purdue's departments of Agricultural Economics, Agronomy and Botany and Plant Pathology expect farmers to dig deeper into their wallets to grow corn, soybeans and wheat in 2011 than first thought last fall. An updated Purdue Crop Cost & Return Guide outlines those higher cost projections.
Since October, fertilizer and diesel fuel prices have gone up, while crop insurance premiums are likely headed higher, the economists say. On the flip side, pesticide and grain dryer fuel prices have dipped.
It adds up to a per-bushel production cost of $4.19 for rotation corn on average-yielding land, up 30¢ from 2010. The projected cost to produce rotation soybeans this year is $9.73/bu. on average-quality land, a 33¢ jump from one year ago.
Average-quality land is capable of producing 161 bu./acre of rotation corn and 49 bu./acre of rotation soybeans.