Managing Crop Costs Instead of Cutting Inputs

After years of crop costs ratcheting up along with fertilizer prices, the cost of corn and soybeans have dropped compared to last year and farmers are looking at ways to cut back to turn a profit.

That shouldn’t be through reducing nitrogen, though, according to Chad Hart, a farm economist with Iowa State University. Farmers need to find the spot where they can save money while not damaging the yield.

“Farmers for the last few years haven’t used operating loans as much to avoid some of the interest charges we’ve faced there, they’ve used their own labor instead of hired. But for the most part what you’re doing is trying to manage those costs to keep them within check here.” 

A challenge with something like fertilizer, where prices remain historically high.

Melissa Miller is with the Iowa Nitrogen Initiative, she’s been researching how much nitrogen a crop needs.

“The optimum rate varies from field to field over a hundred percent. This past year, we saw rates from 77 pounds of nitrogen per acre all the way up to 420, and even if that sounds high that plant was taking up every last pound of that nitrogen so there was really extra loss to the environment.” 

Miller says the big question is, “Why that is?” The answer could make farmers more profitable.

“Are there different management decisions we can make with tiling, with harvesting residue, with when we make that application that can bring that input cost down.” 

Outside of nitrogen, Hart says there are opportunities in some areas for farmers to beat the markets with basis.

“One of the things I’ve been watching throughout this year is we’ve seen the ethanol plants maintain a stronger basis than some other outlets out there and farmers have been taking advantage of that.” 

For farmers wanting a detailed look at their operation, Hart says Iowa State University has an estimated cost of production with excel spreadsheets on its ag decision maker website.

“We’ve got an example form that shows you how we got the numbers we got, but we also allow you to put your own numbers. So how much was your seed this year? What did you pay for nitrogen, for phosphate, for potash this year? What’s your crop insurance premium? So you can go in and adjust these budgets to fit your farm better.”