After the last week with temperatures in the 30s, 40s, and even 50s it is really difficult not to start thinking about field work.

Most snow has now melted and we now have to make the final decision on our acres for 2009 and the ratio of corn and soybeans. We didn’t regain all the soybean acres that we lost to corn in 2007, but it was close. Our soybean acres in Iowa increased with 1 million acres in 2008 mostly because of the late planting and the high fertilizer prices last spring. Production costs are right now the highest we have ever seen for corn and soybean. I have asked a few of my close friends that are farming across Iowa on what they expect that it will cost to establish an acre of corn and soybean in 2009.

After talking to my friends we can up with the following cost. For corn after soybean it looks like that the cost will be $590 per acre not including your salary and crop insurance. We used $90 for corn seed, $70 for nitrogen, $70 for dry fertilizer, $225 for cash rent, $95 for equipment costs, and $40 for herbicide. With a yield of 185 bu/acre that would mean a breakeven of $3.20 per bushel to breakeven. For soybean it looks like that it will cost us $465 per acre, again, not including your salary and crop insurance. We used $50 for soybean seed, $70 for dry fertilizer, $225 for cash rent, $80 for equipment costs, $15 for insecticide (if aphids are at threshold), and $25 for herbicide. With a yield of 55 bu/acre that would mean $8.45 per bushel to breakeven.

It is alarming when looking at the numbers but I don’t think that it is a surprise to anybody that you better have to be a good economist the next year to be able to a profit. The numbers above here may seem high to you but the realty is that we will need above trend line yields to help us to breakeven in 2009. It will be challenge. My best advice is to be sure that you know what your expenses are. I would highly recommend you to sit down and figure out what it will cost to breakeven on your farm. For yield use the last 5 year average yield. Let’s all hope that we will get a great spring – after the last 2 years I think that “mother nature” owe us one! We will need it.

SOURCE: ISU’s Palle Pedersen