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USDA Corn Cost USA sb974-1

USDA Corn Cost USA sb974-1 - Electronic Report from the...

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United States Department of Agriculture www.ers.usda.gov Electronic Report from the Economic Research Service Statistical Bulletin Number 974 August 2001 Characteristics and Production Costs of U.S. Corn Farms Linda F. Foreman 1 In this report… The production costs for a bushel of corn ranged from an average of $1.19 per bushel for those farmers in the lowest quartile to $3.67 per bushel for corn farmers in the highest quartile, ranked by production costs per bushel. Producers with high corn production costs per bushel tended to have both lower than average yields and higher than average corn costs per acre. Corn producers in the Heartland and Prairie Gateway had lower corn production costs per bushel than corn producers in the Northern Crescent and Southeast. Part-time farmers and farmers with small corn acreage tended to have high corn production costs per bushel. Keywords: corn, costs of production, cost variation, corn production practices, farm characteristics. 1 Agricultural Economist, Resource Economics Division, Economic Research Service, USDA
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2 Economic Research Service, USDA Overview In 1996, corn was the leading U.S. crop in terms of both acreage and production value. Favorable weather conditions in 1996 resulted in an above- average national corn yield of 127.1 bushels per harvested acre. At $2.71 per bushel, the 1996 market-year corn price was above average but down from the previous year (U.S. Dept. of Agriculture, National Agricultural Statistics Service Web site). In 1996, operating and ownership costs for producing corn ranged from an average of $1.19 per planted bushel for 25 percent of the growers with the lowest costs to an average of $3.67 per planted bushel for the 25 percent of growers with the highest costs. Some 79 percent of U.S. corn farmers produced 93 percent of the Nation’s corn for less than $2.71 per bushel ( fig. 1 ) 1 . Corn production costs per acre totaled $230.38 in 1996, compared with gross production value of $369.70 per acre for corn, including corn silage. The capital cost for machinery and equipment was the largest component of production costs per acre. Fertilizer expenditures per acre were the second largest cost item, followed by chemical, seed, and fuel expenditures. With the passage of the 1996 Federal Agricultural Improvement and Reform (FAIR) Act, the Government removed acreage restrictions on program crops and instituted production flexibility contract payments that are not linked to commodity grain prices (Young and Westcott, 1996). Under the FAIR Act, grain producers face increased risk from low grain prices. Prior to the FAIR Act, deficiency payments rose when grain prices were low, in effect stabilizing farmers’ incomes. Unlike deficiency payments, contract payments are fixed under the FAIR Act; thus, farmers’ incomes may be more volatile as grain prices fluctuate. Between 1996 and 2000, the marketing-year average corn price dropped from $2.71 to $1.85 per bushel. The decline in grain prices increased the financial pressure on many 1 Costs exclude storage and marketing costs.
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  • Spring '08
  • Maize, Operating cost, Capital cost, Cost-of-production theory of value, bushel, Economic Research Service

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USDA Corn Cost USA sb974-1 - Electronic Report from the...

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