Colorado Corn Cultivating Opportunities

During these economically stressful times, rising food prices can lead to questions about how much profit a farmer actually makes. With 98.5 percent of the population not working in agriculture, it becomes easy to make assumptions based upon only the prices on the shelves. But, in all actuality, farmers must spend a large percentage of the price they will get after harvest on the inputs necessary to grow the crops that provide food, feed and fuel. Not only does it costs a significant amount of money to farm, but growers must plant each spring without knowing what they will recoup in the fall.

“Farming is not a nine-to-five cubicle job with a paycheck at the end of the week,” said National Corn Growers Association President Darrin Ihnen, a grower in Hurley, S.D. “Even the smallest family operations need to run their farm as a small business, pay attention to costs and do their best in a market that is impacted by many outside forces beyond their control, from potentially disastrous weather patterns to new rounds of regulation from Washington.”

Two new reports issued this past week detail some of these costs. In 2009, farmers ended up spending more when purchasing and renting land and on seeds and plants. These increases were somewhat offset by decreases in the prices of fuel, fertilizer and agricultural chemicals.

According to one report detailing land value and cash rent trends, crop land values continued to increase in 2010, In the Corn Belt, average values increased to $4,000 per acre, up from $3,910 last year, with Illinois having the highest value at $4,820. In the Northern Plains, average crop land values reached $1,390 per acre, with Nebraska valued the highest in this region at $2,410.

Average cropland rents also increased in 2010. Despite having the highest average cropland value, Illinois did not have the highest rents. Iowa farmland led the region with average rents of $176 per acre. Illinois followed with $169 average cash rents. In the Northern Plains, the regional crop rent averaged only $71 per acre. However, the average rent on irrigated land in Nebraska was $170.

Another annual report looks at average farm production expenditures for the previous year reported that farm expenditures were mixed between 2008 and 2009. Expenditures in the seeds and plants category increased more than any other category covered. Spending on seeds and plants in all Midwestern states totaled $7.18 billion in 2009 up from $6.28 one year prior.

As oil prices dropped significantly from 2008, spending in many other categories utilizing crude also saw a decrease. Fertilizer expenditures dropped slightly to a total of $8.56 billion dollars from $9.11 in 2008. Farmers spent slightly less on agricultural chemicals with costs totaling $3.77 billion, a $120 million decrease from 2008. Fuel expenditures decreased the most significantly. In 2008, Midwestern farmers spent $4.75 billion on fuel. In 2009, total fuel expenditures fell $860 million to a $3.89 billion total expenditure.

For each bushel of corn produced, the cost of these items must be subtracted from what farmers sell their crop for in the fall. Poor weather conditions can severely damage a crop leading to serious losses for family farmers across the country.

Exploring the economics behind farming allows those outside of the agricultural industry to cultivate more informed opinions on various issues that affect farmers’ daily operations. Through education, a citizenry now very removed from their agricultural roots can understand and fully appreciate the people who provide them with food, feed and fuel.