Reducing Crop Costs

With lower crop prices, many farmers are struggling to make ends meet. Corn is around $3.50 a and soybean $10/bushel, down from a high of $7 for Corn and $15 to $17 for soybeans/bushel. Brazil crop production continues to drive crop prices lower as they expand acreage into the Amazon forest. To survive, farmers will need to cut costs. Here are tips on cutting crop production costs.

Reduce tillage. The equipment costs, fuel, and maintenance have gone up with inflation from 25%-81%, depending on the tillage operation since 2010. As a comparison of 2010 to 2023 prices: Chisel Plow $14 now versus 2023 in $20, a rise of 42%. Disk Tandem ($13, $17, +31%), Field Cultivate ($11, $17, +55%), Plow ($17, $24, +41%), Soil Finishing tool ($11, $20, 81%), Sub soil ($18, $27, +50%). Farmers who eliminate at least one tillage pass or go to no-till can save money. Gary Schnitkey, Illinois University Economist reports in the last two years, the profit per farm on going to no-till over just one pass tillage was $26 to $48. When prices were much higher, the conventional one pass system had a higher profit the first two years, around $39-$47 per acre, but 4 years had almost no price increase, and the last two years (lower prices, higher costs) the advantage went to no- till. Eliminating one tillage pass may save $11-$27/acre.

Tillage is not the only way to save costs. Reducing fertilizer costs, especially on phosphorus, potassium and even nitrogen may reduce costs by up $120 per acre. This only applies if you have adequate fertility. It almost always pays to lime your fields to correct pH because this increase nutrient availability. If applying manure or using legume or clover cover crops, apply the proper credits to reduce your N costs. Planting cover crops may seem like an added costs, but increases your soil organic matter levels, keeps soil and nutrients in place, and may reduce your fertilizer cost.

Planting early maturing crops (corn and soybeans) can save drying costs and may even result in premiums, especially for early harvested corn. One way to save drying costs is to harvest corn and soybeans at a lower moisture by letting it field dry. That depends on the weather and the year, but drying costs are expensive and you have to weigh that again possible late harvest losses.

Pest management is another big cost item on farms. Reducing fungicides and insecticides to using them only when needed can increase profits. Cover crops, especially rye, helps reduce problem weeds like marestail, Palmer Amaranth, and water hemp plus other weeds like foxtail, thistle and rag weeds.

Soil testing is not an expense to cut out unless you have multiple years of data that is consistent. Use your soil tests to set realistic yield goals so that you are not applying excess fertilizer. Sometimes, farmers can look at alternative crops like hay or wheat. Other options are growing specialty crops that generate premiums. Ultra-high protein Non-GMO soybeans, high oleic soybeans and growing soybeans for seed beans, generally generate more profit. Corn is harder to get premiums except for Non-GMO and organic production, however; some livestock producers may be willing to pay premiums for high protein and high-test weight corn if you can document animals get to market faster.

Other options for reducing costs include trying to negotiate lower rent costs, going to a shared rent, or 50-50 lease to get the land owner more involved in the crop expense side. If the landowner is willing to invest in improved drainage like tile and waterways, that can improve crop yields. Sometimes it just pays not to farm everything, especially low producing areas that drown out, or have animal damage along woods, ditches etc. where crops have a history of not producing. These areas can be signed up as filter strips or non-farmed areas for wildlife. Government payments may be possible for keeping land out of production for these purposes.

Some other quick tips. Consolidate seed purchases with several farmers to maximize crop discounts, sell unused machinery, share machinery with some other farmers, and possibly use drones more often to scout and apply inputs like seed, fungicides, herbicides etc. Drones reduce soil compaction and are becoming an economical way to apply crop inputs and to scout. Take advantage of any local on-farm research to obtain the best crop seed for your soils. Finally, some experts advocate reducing soybean inoculants (savings of $1.50) per acre on fields with a history of soybeans, but inoculants can pay big dividends (2-5 bushel) if the Rhizobium bacteria are lacking. Sharpen your pencil and get farm budgets ready for next year.