Crops > Cost & Return > Profitability

Iowa crop farming profitability in the 21st century

pdf fileAgDM Newsletter
December 2015

Crop farming in the U.S. has been very financially volatile during the 15 years of the 21st Century. Volatile crop prices have created periods of strong profitability which, in turn, have driven up farmland rents and market values and prices of production input. These same volatile crop prices have also created periods of economic breakeven or even loss for some farmers.

To better analyze profitability at the farm level, I have created two “typical” Iowa crop farmers who grow corn and soybeans. Using average costs, yields, and efficiency factors, the only difference between the two farmers is how they control the land resource. One farmer owns the land, with no debt and the other cash rents. The monthly profitability of these two farmers has been tracked monthly over the past 15 years.

Similar results occurred for the soybean enterprise of these two farmers. Figure 3 shows their revenue, cost, and profitability. Years of record high soybean prices generally corresponded with those of high corn prices. Soybeans experienced more normal prices between these record price periods.

Soybean production costs also increased during this period as shown in Figure 4.

If you are interested in learning more about the economics and profitability of corn and soy¬≠bean production of these two farmers, click on “Outlook and Profitability” on the Ag Decision Maker home page and look under the “Current Profitability” section. There are Microsoft Excel “Decision Tools” for corn and soybeans that contain an array of analysis and graphs of the economics and profitability of these two farmers. The tools are updated monthly so you can follow the changing income, costs, and profitability of each farmer.

The cost, yield, and acre figures in the analysis represent averages for the state of Iowa and likely don’t represent any one individual farm. The profit tools allow you to enter data for your farm in the “input model” worksheet of each workbook. You can enter your information for the 2015 crop (or any of the 2000 through 2015 crops) to see where you stand relative to current crop prices. The charts and tables automatically update based on the figures you enter. The workbooks allow you to enter your data into either the land owner farmer or the cash rent farmer portions of the input model even though you may own and rent cropland.

 

Don Hofstrand, retired extension value added agriculture specialist, agdm@iastate.edu