In Minnesota, corn and soybeans are major crops grown, with the largest acres planted and the highest sales values. Based on USDA/NASS data, the 2015 corn and soybean production values were $4.86 billion and $3.25 billion, respectively. In 2015, the planted acres for corn and soybeans were 8.1 and 7.6 million acres respectively out of a total of 25 million acres in Minnesota. With over half the crop acres in corn and soybeans the profitability of these two crops drives the rural economy.
Figure 1 below indicates the corn and soybean average input costs per bushel, compared to average sales price received by the farmers in the FINBIN database from southern Minnesota. The top two lines represent soybeans with the triangle line indicating the average price and diamond indicates the average input costs per bushel. Farmers want to always see the average price line above the average input cost. From 2007 through 2013 this was true and the gap between these lines represented profits for farmers. Then in 2014 and 2015, the price fell below the input costs representing a lost for average farmer. The bottom two lines are for corn with the price line indicated by X and the input costs indicated by squares. Corn losses occurred in three years. This was from 2013 through 2015, while profits occurred from 2007 through 2012.
Figure 1. Corn and Soybean Average Input Costs per bushel compared to Average Sales Price
So what can a farmer do to reverse the trend for the last couple of years? The first thing would be higher prices, something out of their control, followed by better than normal yields, the next thing is for a farmer to control costs. Figure 2 indicates the top three input costs for corn from 2010 through 2015 for farmers in Adult Farm Management programs in Southern Minnesota. Land rent is the highest cost, accounting for a third of the total costs. It is very hard to negotiate lower rental rates. Landlords have higher property taxes, but as the chart shows rents started declining in 2014 from a high in 2013 by less than 1% and when down further in 2015 by 5.4%. Fertilizer is the second highest cost and has declined in the past two years. Seed is the third highest cost and did go down slightly in 2015. The average cost per bushel in Figure 1 was $3.83 per bushel with a state record of over 200 bushels of corn produce in 2015. The market is currently approaching this price for 2016 corn. Using 180 bushels in 2016 instead of 204 in 2015 the breakeven price would increase to $4.34 per bushel.
Figure 2. Top Three Input Costs for Corn from 2010-2015
Figure 3 indicates the top three input costs for soybeans from 2010 through 2015 for farmers in Southern Minnesota in the FINBIN Database. Once again land rent is the highest cost representing 40% of input costs for soybean production. This was followed at a much lower figure by seed cost at $58.28 per acre in 2015 down from the high in 2014 of $60.83 per acre. Chemicals was third and that continued to go up in 2015 as farmers are having to apply more chemicals as weeds become more resistant to roundup. The average input cost for soybeans, with great yield of 59.4 bushels per acre in 2015, was $8.67 per bushel. Using a 50 bushel per acre yield the breakeven price would increase to $10.30 per bushel. A price that is available today.
Figure 3. Top Three Input Costs for Soybeans from 2010-2015