Plan For Higher Input Prices This Year


The new year is well on its way and I imagine that means you’re hitting every winter meeting possible to stay on top of your game.

Before you get too far into 2011, maybe it’s a good idea to take a breath and look back at 2010. It might help you get a better perspective on how agriculture has coped during the recession compared to what most other industries have gone through. Granted, you already know agriculture has fared pretty well, but how well?

 According to USDA’s Economic Research Service, net farm income is forecast at $81.6 billion for 2010. That’s up 31% from 2009 and 26% higher than the 10-year average of $64.8 billion for 2000-2009.

Net cash income is expected to rise nearly 34% from 2009, and 28.8% above the previous 10-year average. Net cash income includes only cash receipts and expenses and is generally less variable than net farm income.

Total production expenses for 2010 are forecast to be 2% higher, reversing the 4.1% drop in 2009. This is in stark contrast to the 15.7% and 8.8% increases in production expenses recorded in 2007 and 2008, respectively.


Now let’s look at this year’s production costs, which is easier thanks to data from Gary Schnitkey, University of Illinois economist, and [3]. The university updates this site regularly.

For example, in the table (below?) are key production costs from farmdoc that might help if you’re trying to project costs for your operation this year. At the least, they’ll give you a ballpark of how inputs prices have changed the last few years and forecast 2011 if you haven’t already locked them down.

These numbers are based on corn planted in central Illinois on high-productivity farmland. Years 2004-2009 are summarized from grain farms enrolled in Illinois Farm Business Farm Management. Years 2010-2011 are projections (P).

You’ll take a big hit on rising fertilizer costs this year, unless you’ve already pre-purchased it. Still, even at $135/acre, it’s a far cry from 2009 when it hit $185/acre.

Power costs – including machine hire/lease, utilities, repair, fuel and oil, light vehicle and depreciation – were broken out separately However, total power costs haven’t gone up much since 2008. From 2008 to 2011, those costs were $82, $80, $89 and $91, respectively.

As always, maximizing your production and marketing for profit is what it’s all about. Actually, that’s our tagline on the cover of the magazine, right above Corn & Soybean Digest, and that’s what we’re all about. 


January 2011