Economic Tidbits

Farmers Catch a Break with Lower Expenses

Nebraska crop producers might catch a break next year with lower production expenses. At least corn and wheat producers might, soybean production costs look to remain steady. Reduced expenses compared to this year are the underlying story of the 2024 crop budget estimates released by the Center for Agriculture Profitability (CAP) at the University of Nebraska-Lincoln. CAP estimates include 84 budgets for 15 different crops using a variety of tillage practices, crop rotations, seed technologies, nutrient and pesticide applications, and yield goals. Both cash costs and economic costs are included in the estimates. Cash costs do not include the ownership cost of machinery and equipment, nor the real estate opportunity cost when land is owned. Economic costs include the opportunity cost of land and equipment and depreciation costs.

Figure 1 highlights the ranges of estimated per bushel costs for dryland and irrigated corn, soybeans, and wheat compared to this year. The lower costs for corn and wheat are largely driven by reduced fertilizer costs, off 20-40 percent in many of the budgets. Fertilizer costs were figured at $0.60 per pound of nitrogen. Also, the pounds applied were reduced in the budgets to reflect continued improvement in application practices. In contrast, land, machinery, interest, and pesticide costs are all projected to be higher. The budgets and more information on the assumptions underlying them can be found at: www.cap.unl.edu/budgets. The extension crop specialists and economists who develop the budgets note they should be used as guides as the experience of individual operations will differ.

While the projections indicate crop production expenses could moderate next year, crop prices will likely be lower too. Meaning, at this point, it seems achieving positive returns for crop producers may be a struggle next year.

FIGURE 1. ESTIMATED PER BUSHEL PRODUCTION COSTS

Source: 2024 Crop Budgets, Dept. of Agricultural Economics, University of Nebraska-Lincoln

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