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Corn+Soybean Digest

Don't Stop Cutting Costs

Cutting costs seems to be the mantra in almost any business these days. It sure is in our company and, frankly, it's what I hear from most buddies who are in industries outside of agriculture.

For farmers, watching costs is often the difference between profit and non-profit. For example, figuring out a way to eliminate a trip across a field saves money on several fronts, such as fuel, tractor expense and, ultimately, soil compaction.

There's probably no better time than at harvest to begin looking at ways to evaluate your production practices and look at how you can shave unnecessary costs in the future.

That's why, starting with this issue, you'll be seeing a regular column called, you guessed it, “Cost Cutters.” The first installment begins with “Skip A Trip,” which examines why it doesn't pay to chop stalks at harvest.

When cost-cutting, decisions should always be dictated by return on investment, says Mike Duffy, Iowa State University Extension economist. “Too often the strategy is simply cutting back, but this can do more harm than good if cuts are made in the wrong area.”

We'll help you identify those areas in subsequent issues of this magazine. Some of the topics we'll be covering include:

  • Machinery. Don't get caught up in technology that may not provide a return on investment.

  • Seed selection. Will all those extra traits earn you a profit? Ohio State says you can save $15/acre on first-year corn that doesn't need the Bt-corn rootworm trait.

  • Take advantage of rotation's benefits. Ohio State reports less nitrogen (N) cost due to soybean N credit of $10/acre.

  • Buy fuel and fertilizer in bulk.

  • Consider a switch to generic herbicides. Cut up to $1.22/acre, according to Ohio State research.

  • Cut plant populations.

  • Use correct tire inflation. That could save you 77¢/acre in fuel costs, says Ohio State.

THESE ARE JUST a few of the areas we'll cover in the coming months as we bring you more tips from farmers and researchers on ways to help manage your production costs.

And that could be especially important now because of recent baseline data from the University of Missouri Food and Agricultural Policy Research Institute (FAPRI). It says:

  • Corn prices for this marketing year are projected at $3.47/bu., down from $4.05 last year. By 2015 prices should be back at $3.98.

  • Soybean prices, projected at $9.44/bu. for this marketing year, decline to $9.12 next year, then steadily rise to $9.74 by 2015.

  • Ethanol prices at Omaha are projected to increase from $1.65/gal. this marketing year to $1.76 in 2010-2011 and to $2.09 by 2015.

  • Oil prices, which hit $145/barrel leading into the recession, are projected to average $61.31/barrel for 2009-2010. By 2015, the price rises to $94 for West Texas intermediate crude.

Shaving costs wherever possible makes sense — always.

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