A few weeks before harvest South Dakota overall crop budgets are showing lower returns for 2014, said Jack Davis, SDSU Extension Crops Business Management Field Specialist.
"With lower commodity prices and near constant costs compared to the past four years, returns to labor and management are projected below levels realized during that time," Davis said.
Davis said the projected prices used in the budgets are lower than 2013 projections. Projected prices per bushel are corn at $4.50, soybeans at $11.50, and wheat at $6.50," Davis said.
Direct costs estimates per acre are corn at $385, soybeans at $195, and wheat at $195. Direct costs as a percent of revenue are 57.6 percent for corn, 37.8 percent for soybeans, and 50 percent for wheat.
He explained that the two key costs for each crop are seed and fertilizer.
"Seed and fertilizer expense as a percent of revenue are at 36 percent for corn, 20 percent for soybeans, and 29 percent for wheat," Davis said. "As seed and fertilizer costs are a high percentage of revenue, management focus on these two items will pay good dividends. Land and machinery costs are also key cost items in each of the crops."
He explained that to achieve the greatest return on farming operations, management time should be spent on cost control and best management practices of key input items.
"Fertilizer costs were the most variable category from year to year and prices have trended lower for fertilizer during 2013," he said.
He added that corn on corn is not as profitable as the past few years.
"If a farm experiences yield drags with continuous corn, crop rotation may offer a profitable alternative. The price and yields used in these budgets favor soybeans also giving incentive to use crop rotation," he said.