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Illinois
AgriNews - April 2004
 
Crop Costs Higher in 2004
Gary Schnitkey and Dale Lattz
Department of Agricultural and Consumer Economics
University of Illinois at Urbana-Champaign
Variable costs for producing corn
and soybeans are projected to be highe r in 2004 when
compared to costs in 2003. Variable costs, which include
fertilizer, pesticides, seed,
drying and storage, and machinery (repair, fuel, and
hire) categories, are projected to
increase by $5 to $7 per acre for corn and $3 to $4
per acre on soybeans.
Cost projections are made for corn and soybeans in northern,
central, and southern
Illinois. Central Illinois projections are further broken
down into projections for high
productivity farmland (167 bu. average corn yield) and
low productivity farmland (157
bushel average corn yield).
These projections are available at farmdoc in
the management section from the historic crop cost tool
(http://www.farmdoc.uiuc.edu/manage/enterprise_cost/crop_revenue_less_variable_cost.
html). This tool compares 2004 projections to actual
costs from 1999 through 2003. Actual costs are obtained
from farms enrolled in Illinois Farm Business Farm Management
(FBFM).
2004 Projected Costs
Variable costs in 2004 for corn are projected to be
$182 for northern Illinois, $179
for central Illinois with high productivity farmland,
$180 for central Illinois with low
productivity farmland, and $172 for southern Illinois.
Compared to 2003, 2004 costs are
higher in the fertilizer, pesticide, seed, and fuel
categories.
Variable costs in 2004 for soybeans are projected to
be $117 for northern Illinois,
$112 for central Illinois with high productivity farmland,
$113 for central Illinois with
low productivity farmland, and $110 for southern Illinois.
Compared to 2003, 2004 costs
are higher in the fertilizer, pesticides, seed, and
fuel categories.
Cost Increases Persist
The projected 2004 cost increase is not unusual. For
corn, average costs across all
FBFM farms have increased each year since 1999. Projected
costs for corn across all
regions are $18 to $23 per acre higher in 2004 when
compared to actual costs in 1999.
Seed costs are the cost category with the largest inc
rease for corn. Between 1999
and 2004, seed cost increases account for 33% of the
increase, followed by fertilizer
(28%), machinery (22%), and pesticides (17%). The only
general category not showing
an increase is drying and storage.
Soybean costs are projected higher in 2004 when compared
to 1999. More
variability exists across the regions. Northern Illinois
soybean costs are projected $14 per
acre higher in 2004 compared to 1999. Central Illinois
with high productivity farmland
has a $12 per acre increase, central Illinois with low
productivity farmland has a $20
increase, and southern Illinois has a $9 increase.
Seed costs are the cost category increasing the most for soybeans. Between 1999
and 2004, seed accounted for 45% of the variable cost inc rease in soybeans, followed by
fertilizer (20%), pesticides (20%), and machinery (20%). Drying and storage decreased
slightly, accounting for -5% of the increase.
Summary
While per acre variable costs continue to increase in 2004, revenue less variable
costs will likely be higher in 2004 compared to 2003. Commodity price forecasts are
considerably higher in 2004 when compared to actual prices between 1999 and 2002.
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