Jack B. Davis, CPA
South Dakota crop budgets are showing lower returns for 2014. Using a projected corn price $4.15 and soybeans at $10.80 returns to management and labor favor soybeans. With direct costs estimates (per acre) for corn at $385 and total costs estimated at $608, the returns to labor and management are $15 an acre for corn. Using direct costs for soybeans at $190 and total costs at $415, the returns to labor and management are estimated to be $71 an acre. The price outlook and input costs for 2014 crops are supporting lower returns to corn.
| Corn | Soybeans |
Price | $4.15 | $10.80 |
Yield | 150 | 45 |
Gross Revenue | $623 | $486 |
Direct Costs | $385 | $190 |
Return over direct costs per acre | $238 | $296 |
Total Costs | $608 | $415 |
Return to Management & Labor | $15 | $71 |
Direct costs as a percent of revenue are 62% for corn and 39% for soybeans. The two key costs for each crop are seed and fertilizer. Seed and fertilizer expenses as a percent of revenue are at 38% for corn and 20% for soybeans. As seed and fertilizer costs are at a higher percentage of revenue, management focus on these two items will pay good dividends. Land and machinery costs are also key cost items in each of the crops. Crop budgets and comparisons are available here.
With lower commodity prices and near constant costs compared to the past four years, returns to labor and management are projected below levels realized during that time. Fertilizer costs are the most variable category from year to year and prices have trended lower for fertilizer during 2013. Corn on corn is not as profitable as compared to past years. If a farm experiences yield drags with continuous corn, crop rotations may offer a profitable alternative. The price and yields used in these budgets favor soybeans, also giving incentives to use crop rotations.
To achieve the greatest return, management time should be spent on cost control and best management practices of key input items.
Source :SDSU