by: Barry Ward- Leader, Production Business Management, Ohio State University Extension
Production costs for Ohio field crops are forecast to be slightly lower to slightly higher in 2017 depending on the crop and the profit picture remains poor, much the same as in 2016. Variable costs for corn for 2017 are projected to be $328 to $407 per acre depending on land productivity. Lower fertilizer costs are offset by somewhat higher fuel, chemical and interest costs.
Variable costs for 2017 Ohio soybeans are projected to range from $194 to $210 per acre. Some minor changes in soybean weed control assumptions led to higher herbicide costs. This higher cost together with higher fuel and interest expense more than offset lower fertilizer and seed costs.
Wheat variable expenses for 2017 are projected to range from $161 to $192 per acre, down slightly from 2016. Lower fertilizer prices are the primary drivers of lower variable costs in 2017 offsetting slightly higher herbicide costs.
With continued low crop prices expected for 2017, returns will likely be low to negative for many producers. Projected returns above variable costs (contribution margin) range from $183 to $342 per acre for corn and $212 to $384 per acre for soybeans. (This is assuming fall cash prices of $3.65 per bushel for corn and $9.40 per bushel for soybeans.) Projected returns above variable costs for wheat range from $112 to $205 per acre (assuming $4.20 per bushel summer cash price).
Returns to land for Ohio corn (Gross Revenue minus all costs except land cost) are projected to range from -$40 to $107 per acre in 2017 depending on land production capabilities. Returns to land for Ohio soybeans are expected to range from $39 to $202 per acre depending on land production capabilities. Returns to land for wheat (not including straw or double-crop returns) are projected to range from -$62 to $25 per acre.
Total costs projected for trend line corn production in Ohio are estimated to be $786 per acre. This includes all variable costs as well as fixed machinery, labor, management and land costs. Fixed machinery costs of $130 per acre include depreciation, interest, insurance and housing. A land charge of $187 per acre is based on data from the Western Ohio Cropland Values and Cash Rents Survey Summary. Labor and management costs combined are calculated at $76 per acre. Returns Above Total Costs for trend line corn production are negative at -$157 per acre.
Total costs projected for trend line soybean production in Ohio are estimated to be $566 per acre. (Fixed machinery costs – $108 per acre, land charge – $187 per acre, labor and management costs combined – $55 per acre.) Returns Above Total Costs for trend line soybean production are also negative at -$66 per acre.
Total costs projected for trend line wheat production in Ohio are estimated to be $540 per acre. (Fixed machinery costs – $126 per acre, land charge – $187 per acre, labor and management costs combined – $38 per acre.) Returns Above Total Costs for trend line wheat production are also negative at -$205 per acre.
These projections are based on OSU Extension Ohio Crop Enterprise Budgets. Newly updated Enterprise Budgets for 2017 have been completed and posted to the OSU Extension Agriculture and Natural Resources Farm Management Tools website: