USDA Cost of Production Estimates Show Little Change from 2016

by Brent Gloy

According to the latest USDA cost of production estimates, U.S. farmers will find the 2017 cost of producing corn, soybeans, and wheat basically unchanged from 2016.  Combined with the outlook for flat to slightly better commodity prices, the cost of production estimates portray yet another year of challenging economic conditions throughout corn, soybean, and wheat country. Continue reading

Fertilizer Leads Variable Expenses Lower

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by David A. Widmar

A few weeks ago we evaluated fixed expenses to see if adjustments lower had occurred. Changes have been slow, but have started to emerge. Another second component of production costs are variable expenses. These are the expenses producers typically monitor very closely; fuel, fertilizer, and seed. This week we take a look at the USDA’s cost of production data and the Purdue crop budgets to evaluate where source of lower variable expense have occurred. Continue reading

Are Fixed Farm Expenses Coming Down Yet?

 

Fixed Expenses coming down. Photo by Johnny Klemme

by David A. Widmar

As production agriculture in the U.S. transitions out of the boom-era, producers face a margin squeeze resulting from declining output prices and stubbornly high input costs. In most cases, producers are facing 2015 and 2016 crop production budgets with negative returns.

We are often asked when things on the farm will improve. In an earlier post and paper, we outlined that in the long-run it is likely that a combination of three scenarios will take place to stabilize farm profitability: 1. variable costs moderate through eventual reduction in farmer demand for inputs 2. Fixed costs decline through reduction in fixed assets demands and values, and/or 3) output price may improve.

In this post, we take a look at fixed costs from the most recent data (2014) provided by the USDA and Kansas Farm Management Association (KFMA). Keep in mind that net farm incomes across the country were lower in 2014, but still well above average.

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