Covering Your Costs: Issued by Dwight D. Raab

An allocation of the cost to produce corn from over 600 farms in each of the previous four years reveals that costs to produce corn on higher productivity soils in central lllinois have risen from $655 per acre in 2008 to $788 in 2011. This includes all costs of production including land. When one considers the estimated cost to produce the 2012 corn crop, the total cost of corn production increases by an additional $44 to a total of $832 per acre.

Table 1 reveals that the estimate for the 2012 cost to produce corn in central Illinois will increase only slightly from 2011. Variable costs are estimated at $386 per acre, an increase of $13 from 2011 (or a 3.5% increase) with the majority of the increase from nitrogen and dry fertilizer ($4 increase) and seed ($7 increase).


Of the non-land costs, the greatest increases are in storage costs with a budgeted a $5 increase and machinery depreciation with a budgeted $4 increase. Total non-land costs are estimated at $587, a $23 increase from 2011 or 4.1%. At a $5.00 per bushel sale price, it would take just over 117 bushels of corn to cover the non-land costs.

Land costs are projected at $245 per acre, an increase from $224 from the previous year (9.4%). Farmland real estate taxes seem to ever increase (up $1) as do land costs (up $$20). At a $5.00 per bushel sale price, it would take an additional 49 bushels of corn to cover the land costs.

With an estimated $832 per acre cost to produce corn, Table 2 illustrates the possible yield and prices combination that will generate revenue per acre in excess of the cost to produce in the yellow area. With the 2012 corn crop yet to be planted, one can assume trend yields. Current corn price levels offered for the fall of 2012 would seem to be at attractive levels that would cover production costs.


The author would like to acknowledge that data used in this study comes from the local Farm Business Farm Management (FBFM) Associations across the State of Illinois. Without their cooperation, information as comprehensive and accurate as this would not be available for educational purposes. FBFM, which consists of 5,500 plus farmers and 60 professional field staff, is a not-for-profit organization available to all farm operators in Illinois. FBFM field staff provide on-farm counsel with computerized recordkeeping, farm financial management, business entity planning and income tax management. For more information, please contact the State FBFM Office located at the University of Illinois Department of Agricultural and Consumer Economics at 217-333-5511 or visit the FBFM website at

Issued by Dwight D. Raab
Illinois FBFM and Department of Agricultural and Consumer Economics
University of Illinois

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