Extension Economist Estimates Farming Costs

Extension Economist Estimates Farming Costs

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by Rich Maples

How much does it cost to grow soybeans? It varies from farm to farm and from field to field, but an economist for the Cooperative Extension Service can give you a pretty good idea.

"On average, in Arkansas it costs about $150 to grow an acre of soybeans," says Dr. Tony Windham, who work with Extension soybean specialists to calculate production and fixed costs for various soybean production systems.

Windham says production, or out-of-pocket, expenses account for about $120 of the cost. The largest production expense is herbicides. "They can account for 20 to 30 percent of your out-of-pocket costs, depending on your production system. Fertilizer is generally the second biggest expense, followed by equipment repairs and maintenance, seed, interest on the operating loan and so on."

Fixed, or ownership, costs are the second category of expenses that Windham calculates for Arkansas crops. "The primary ownership cost is depreciation, or the cost of wearing out equipment to produce a crop. Taxes, insurance and the interest on money invested in equipment are also included in fixed costs.

"In the crop cost estimates we've calculated, fixed costs have ranged from $25 to $60 an acre. The higher figure is for center pivot irrigated soybeans. The low number is for dryland beans."

Windham also compiles cost data for the farms enrolled in the checkoff-funded Extension Soybean Research Verification Program.

"We've found in the verification program that when you compare no-till with conventional tillage, you don't necessarily save money with no-till production," the economist noted. "The savings in tillage costs can be offset by the cost of herbicides. The benefit of no-till is a savings in time.

"We estimate that no-till saves one-third hour of production time per acre. For 100 acres, the savings would be 30 hours--time in which a worker, tractor and implement could be used on another part of the farm.

"Over a period of time, no-till could allow a reduction in labor and equipment."

Windham said economic data collected from farms enrolled in the Soybean Research Verification Program are presented in the annual SRVP report available at county Extension offices. The information is also shared at farm meetings.

The cost of production estimates for soybeans are also available at county Extension offices. They present the costs of dryland production; no-till, flood irrigated production; early season production; and irrigated production using furrow and center pivot systems.

"These cost of production estimates, or crop budgets, are used by farmers to determine their cash flow needs for the coming season, and by lenders to better understand the cash requirements of growers who are coming in to borrow money," said Windham.

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