Source: Farmdoc daily, University of Illinois, (edited)
While this article is written for Illinois, many if not all of these thoughts are pertinent in Ohio as well.
Significant increases in production costs in recent years combined with expectations for lower commodity prices have resulted in much lower return expectations for 2023 and 2024 compared with the previous three years (see farmdoc daily, August 29, 2023). In today’s article, we revisit trends in direct costs for corn production in Illinois over time (see farmdoc daily, April 4, 2023 and July 12, 2016, for previous articles). Since 2000, direct costs – which include production inputs – have risen at an average annualized rate of 7% per year. Individual components of direct costs, such as fertilizers, pesticides, and seeds, have all experienced similar average growth rates.
Total direct costs are projected to reach record levels for 2023 and are expected to experience only modest declines for 2024. Fertilizer costs are projected at record levels for 2023, but a fairly large decline is expected for 2024. Seed costs are projected at record levels for 2023 and remain constant in 2024. Pesticide costs are projected to be at record levels for 2023 and to further increase for 2024. In addition to viewing these costs on a $ per acre basis, we also provide perspective on a share of revenue basis.
Total Direct Costs
Direct costs include the cost of production inputs such as fertilizers, seeds, and pesticides (herbicides, pesticides, fungicides). Costs associated with drying, storage, and crop insurance are also included in the direct cost category. Total direct costs for corn production in central Illinois have increased over time from $134 per acre in 2000 to $558 in 2022 (see Figure 1), which implies an average annualized growth rate of 7% between 2000 and 2022. Direct costs for the 2023 crop year are projected at a record level of $579 per acre, with a decline to $527 per acre currently expected for the 2024 crop year based on recently released crop budgets (see farmdoc daily, August 29, 2023 and 2024 Illinois Crop Budgets) and Ohio Crop Enterprise budgets.