Each year, preliminary crop enterprise budgets are unveiled at the Farm Science Review which reveals our best estimates for costs and returns for the main row crops in Ohio for the upcoming year. With continued high crop prices projected for 2022 there is some optimism, however, higher costs will likely decrease profit margins to levels lower than 2021 margins.
Production costs for Ohio field crops are forecast to be higher compared to last year with higher fertilizer, seed, chemical, fuel, machinery and repair costs leading the way.
Variable costs for corn in Ohio for 2022 are projected to range from $477 to $583 per acre depending on land productivity. Variable costs for 2022 Ohio soybeans are projected to range from $266 to $302 per acre. Wheat variable expenses for 2022 are projected to range from $213 to $262 per acre. These are increases over last year of 19%, 18%, and 25% for corn, soybeans and wheat, respectively.
If the current grain prices and costs endure through next year, profit margins will likely be positive although higher costs may create losses for some producers. Grain prices currently used as assumptions in the 2022 crop enterprise budgets are $4.80/bushel for corn, $12.20/bushel for soybeans and $6.90/bushel for wheat. Projected returns above variable costs (contribution margin) range from $226 to $472 per acre for corn and $288 to $529 per acre for soybeans. Projected returns above variable costs for wheat range from $191 to $344 per acre.
Return to Land is a measure calculated to assist in land rental and purchase decision making. The measure is calculated by starting with total receipts or revenue from the crop and subtracting all expenses except the land expense. Returns to Land for Ohio corn (Total receipts minus total costs except land cost) are projected to range from $54 to $283 per acre in 2022 depending on land production capabilities. Returns to land for Ohio soybeans are expected to range from $166 to $393 per acre depending on land production capabilities. Returns to land for wheat (not including straw or double-crop returns) are projected to range from $99 per acre to $242 per acre.
Total costs projected for trend line corn production in Ohio are estimated to be $919 per acre. This includes all variable costs as well as fixed costs (or overhead if you prefer) including machinery, labor, management and land costs. Fixed machinery costs of $78 per acre include depreciation and other overhead. A land charge of $207 per acre is based on data from the Western Ohio Cropland Values and Cash Rents Survey Summary. Labor and management costs combined are calculated at $82 per acre. Details of budget assumptions and numbers can be found in footnotes included in each budget.
Total costs projected for trend line soybean production in Ohio are estimated to be $619 per acre. (Fixed machinery costs: $62 per acre, land charge: $207 per acre, labor and management costs combined: $53 per acre.)
Total costs projected for trend line wheat production in Ohio are estimated to be $541 per acre. (Fixed machinery costs: $36 per acre, land charge: $207 per acre, labor and management costs combined: $48 per acre.)
Current budget analyses indicates favorable returns for soybeans compared to corn or wheat but crop price change, harvest yields and other factors through fall and into summer of next year may change this outcome. These projections are based on OSU Extension Ohio Crop Enterprise Budgets. Newly updated Enterprise Budgets for 2022 have been completed and posted to the Farm Office website: https://farmoffice.osu.edu/farm-mgt-tools/farm-budgets
In addition to projected row crop budgets for 2022, there are newly updated forage budgets posted to our Farm Office site. These include Alfalfa Hay, Alfalfa Haylage and Corn Silage. Also recently updated are two Market Beef Budgets which include Market Beef Budget (Self-Fed) and Market Beef Budget (Bunk-Fed).
by: Barry Ward, Leader, Production Business Management, College of Food, Agricultural and Environmental Sciences, Ohio State University Extension