2015 Production Cost for Self Use Farmers Beef in Iowa

Fertilizer, seed, and chemic costs correspond a sizable portion of the total costs of producing corn.  In this article, costs for these three inputs are reported for the years from 2000 to 2017.  Since 2013, fertilizer costs decreased while seed costs remained stable.  In contempo years, pesticide costs increased.  Looking frontwards into 2019, it seems reasonable to expect pesticide costs to be at higher levels while seed costs may remain stable.  At this signal, fertilizer costs are difficult to predict.

Total Fertilizer, Seed, and Pesticide Costs

The sum of fertilizer, seed, and pesticide costs are shown in Figure 1 for:

1. Corn produced on high-productivity farmland in central Illinois (FBFM, Central Illinois). Primal Illinois costs are obtained from Illinois Subcontract Business concern Farm Management (FBFM) as reported in a publication entitled Acquirement and Costs for Corn, Soybeans, Wheat, and Double-Crop Soybeans.
2. Corn produced in the Heartland region as reported past the Economic Research Service (ERS, Heartland), an agency of the U.Southward. Department of Agronomics. The Heartland region includes southern Minnesota, eastern South Dakota and Nebraska, Iowa, much of Missouri, Illinois, the western tip of Kentucky, Indiana, and western Ohio (run into ERS, Farm Resource Regions). Data are reported on ERS'south website.

The two cost series follow each other tightly, having a correlation coefficient of .98.   The high correlation of the series suggests that costs reported by FBFM are reflective of trends across the greater Midwest.  Key Illinois costs are higher than Heartland costs, likely because yields are higher on high-productivity farmland in key Illinois.  From 2015 to 2017, boilerplate corn yields were 218 bushels per acre in central Illinois compared to 191 bushels per acre in the Heartland.

The sum of the 3 costs increased dramatically from 2006 to 2013, increasing an boilerplate of 12% per year in central Illinois.  The sum of fertilizer, seed, and pesticide costs were $373 per acre in 2013.  Betwixt 2013 and 2016, the three costs decreased an average of 4% per year.  The sum of the iii costs were $323 per acre in 2017, $50 lower than the $373 high in 2013, just yet considerably above costs prior to 2009.

Fertilizer Costs

Of the 3 costs, merely fertilizer costs have declined since 2013.  All prices for major nutrients declined since 2013 (see farmdoc daily, July 11, 2017).  Anhydrous ammonia prices declined from $879 per ton in 2013 to $509 per ton in 2017.  Diammonium Phosphate (DAP) costs declined from $611 per ton in 2013 to $425 per ton in 2017, Potash prices decline from $578 per ton in 2013 to $318 per ton in 2018.  These price declines so resulted in lower fertilizer costs.

For 2018 production, fertilizer prices began the major buy period in the autumn of 2017 with prices lower than 2017 ingather twelvemonth averages.  Fertilizer prices increased throughout late 2017 and the first office of 2018.  It is likely that average fertilizer costs for corn will exist higher in 2018, just the timing of purchase will accept a big impact on costs.  Farmers purchasing fertilizer before volition take lower costs than those purchasing later.

No bids for 2019 are publicly available at this indicate.  It seems reasonable to expect roughly the same costs in 2019 every bit in 2018.  Still, as illustrated in Figure ii, fertilizer costs tin vary tremendously from yr to year.

Seed Costs

Seed costs have remained stable in the years from 2014 to 2017.  Seed costs were $120 per acre in 2014, $118 in 2015, $116 in 2016, and $115 in 2017.  This stability in contempo years comes subsequently rapid rises in seed costs from 2006 to 2014.  Seed costs were $45 per acre in 2006, increasing to $120 per acre in 2014, an average yearly increase of thirteen%.  During the 2006-2014 period, seed costs increased on a per acre basis, on a per bushel of grain produced basis, and on a percent of corn revenue basis (farmdoc daily, Nov 17, 2015).

Seed costs are highly related to harvested acres in the world (farmdoc daily, July 18, 2017).  U.Southward. acres are projected down in 2018 (USDA, Prospective Plantings). However, earth acres are non projected down in 2018 (USDA, Foreign Agricultural Service).  As a effect, seed costs likely will remain the same in 2018 as in 2017.  Similarly, stable seed costs in 2019 seem a reasonable projection.

Pesticide Costs

Pesticide costs increased steadily from 2000 to 2012 (come across Figure 2). Pesticide costs were $33 per acre in 2000, increasing to $49 per acre in 2012, an boilerplate annual increase of 4%.  There was a big increase in 2013 when pesticide costs increased from $49 per acre to $66 per acre in 2013.  Pesticide costs then stayed in the $60 range for the next three years:  $67 in 2015, $66 in 2015, and $64 in 2016.  Pesticide costs further increased to $73 per acre in 2017.

Many weeds are developing herbicide resistance (Hager and three articles by Plewa and Bissonnette on the Bulletin).  Herbicide resistance leads to use of alternative pesticide combinations which are more often than not more expensive than pesticide packages used when herbicide-resistance is non a trouble.  Herbicide resistance likely volition get more of a problem in the futurity.  As a upshot, pesticide costs should exist expected to increase.  Continued costs over $70 per acre seem reasonable for 2018 and 2019.

Summary

When developing 2019 crop budgets, having seed costs per acre remain stable and pesticide costs the same or higher than 2017 levels seems reasonable.  Fertilizer costs will come into clearer perspective towards fall.  At this point, it seems reasonable to wait the sum of fertilizer, seed, and chemic costs to remain stable or increase in 2019.

References

Hager, A. "Spread of Herbicide Resistant Weeds in Illinois and Factors that Forbid Presence of Herbicide Resistance in Illinois Fields." Proc. of the 2016 Wisconsin Crop Management Conference, Vol. 55. https://soilsextension.triforce.cals.wisc.edu/wp-content/uploads/sites/68/2016/03/Hagar-WCMC-2016-herbicide-resistance-Sick.pdf

Heimlich, R. "Farm Resource Regions." USDA, Economic Enquiry Service. August i, 2000. https://www.ers.usda.gov/publications/pub-details/?pubid=42299

Plewa, D., and Bissonnette, S. "2016 Academy of Illinois Establish Clinic Herbicide Resistance Report." The Bulletin, Department of Crop Sciences, University of Illinois, January 18, 2017. http://bulletin.ipm.illinois.edu/?p=3821

Schnitkey, 1000. "Revenue and Costs for Corn, Soybeans, Wheat, and Double-Crop Soybeans, Actual for 2011 through 2016, Projected 2017 and 2018." Section of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, February 2018.

Schnitkey, G. "Seed Costs for Corn in 2017 and 2018." farmdoc daily (7):129, Section of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, July 18, 2017.

Schnitkey, G. "Fertilizer Costs in 2017 and 2018." farmdoc daily (seven):124, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, July 11, 2017.

Schnitkey, G. "Corn Seed Costs from 1995 to 2014." farmdoc daily (5):214, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, November 17, 2015.

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Source: https://farmdocdaily.illinois.edu/2018/06/historic-fertilizer-seed-and-chemical-costs.html

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