The cost to produce corn (maize) in 2022 in Illinois.
In the central and northern parts of the state where the majority of the corn is grown, the variable cost of production was $650 per acre. Labor was included in the cost of variable production.
"Variable cost" is an important parameter because producers will produce even if they are not making a profit as long as they are receiving prices that exceed their variable costs. They do that because they would lose even more money if they did not produce. If they cannot cover even their variable costs then they lose less money by not farming.
The variable cost of farming in Illinois rose by 34% between 2022 and 2023.
Fertilizer was the single largest variable cost in 2022 at $240 per acre.
Pesticides and seeds were next at about $115 per acre, each. It is notable that the US imports a substantial amount of glyphosate (herbicide) from China.
Fixed costs (less land costs) were approximately $250 per acre. It takes a lot of equipment to farm and it depreciates. Mud and dirt are tough on moving equipment. Chaff can accumulate in engine compartments and start fires.
The cost of land was about $300 per acre. Even if you own some of your land, you still have to pay taxes on it and pay the mortgage.
All together, the cost to corn-farm a single acre in Illinois last year is within a whisker of $1200. For frame-of-reference an "American" football field is 1.32 acres.
Illinois had good yields last year and averaged about 233bu/a in the heart of the corn-belt. The cost to produce per acre is painfully sensitive to yields which, in turn, is very sensitive to rain fall.
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| The price of corn is about $6.50 a bushel so most of the guys from Illinois are doing OK. Farmers where there was less rain are hurting. |
Their variable cost of production averaged $2.60 per bushel (which is not sustainable from the production end) and their total cost of production was about $5.10 per bushel.
Rainfall is "streaky". If you lived in a patch of Illinois that was unlucky you might have only harvested 170 bushels per acre (fifty less than the average) and your cost to produce would have been $6.90 an acre. The painful thing about that is your neighbor's fields a scant five miles away might have produced 250 bushels per acre.
Corporate farming and homestead farming are completely different. Similar inputs and outputs but completely different paradigm and success metrics.
ReplyDeleteVariable costs are across every business, and businesses are now finding ways to pass the cost along. We are now routinely paying for "energy" costs for testing where once upon a time this was an assumed cost.
ReplyDeleteFred is correct, and what 'works' for corporate might bankrupt family farms of the same size.
ReplyDeleteJoe, from your numbers, I got $1,555/ac (not including cost of harvest, i.e. 'production' at the bottom of your essay).
ReplyDeleteWhat did you not include in order to get $1,200?
I have noted that in western AZ, they'll get as many as six harvests per year for Barley or Alfalfa. That is something considering we'd be very lucky to get three cuttings, and just lucky to get two where I am from (coastal inland central CA).