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May 1, 2014
Production Publications
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even with this approach to smooth across weather events, likely the returns are influenced
somewhat due to weather given the extreme variability experience across the state over this time
period (e.g., there was tremendous variability in wheat yields in 2013 from west to east in wheat
yields due to weather conditions).
Aggregation of a number of the income and expense categories reported in the KFMA
enterprise reports allows for easier comparisons. Crop income was calculated for each farm‐year
by multiplying the yield by the operator percentage and the commodity price. Gross income
included crop income plus any government payments, crop insurance payments, and any other
type of miscellaneous income directly related to the production of the specific crop. Machinery
costs were the summation of general machinery repairs, machinery hire net of custom work, fuel,
gas, oil, market depreciation, and machinery‐related labor costs. Other costs were the summation
of fees, grain storage and marketing, personal property tax, general farm insurance, utility
expense, conservation, and auto‐expense. Land costs were the summation of cash rent, real estate
taxes, and an opportunity cost on owned land (calculated based on a percentage of the crop times
an average market price).
The following is a brief discussion of the analysis for each of the different enterprises
included. It is important to recognize that in some cases these analyses are based on relatively
small samples (e.g., alfalfa, irrigated corn, and double‐crop soybean) and thus that should be
considered when reviewing results. Nonetheless, it is believed that analyzing these data still can
provide some useful information as to profitability differences.
Non‐irrigated Corn (Table 1)
On average, high‐profit farms earned $149.62 per acre more profit than the low‐profit
farms and $75.13 per acre more than the mid‐profit farms. Prices were similar for high‐ and mid‐
profit farms and slightly lower for low‐profit farms ($5.89 and $5.87 versus $5.76) and averaged
$5.84 per bushel across all farms. Yields were relatively low for all three groups, but followed the
same pattern as profit groupings, i.e., high‐profit farms had the highest yield and low‐profit farms
had the lowest yield. All three profit groups had a substantial part of their income from crop
insurance (averaged almost $110 per acre for all three groups). Gross income was $144.43 per
acre higher for the high‐profit farms compared to the low‐profit farms. Mid‐profit farms had
$52.49 per acre lower gross income than high‐profit farms. Total costs were relatively consistent
across the three groups, ranging from a low of $422.38 (high‐profit farms) to a high of $445.03
(mid‐profit farms). The difference between the high‐ and low‐profit farms was only $5.20 per acre.
The two biggest cost differences between the high‐ and low‐profit farms were machinery and land.
High‐profit farms had $18.35 per acre lower machinery costs, but $23.21 per acre higher land
costs. The mid‐profit farms had the highest costs of the three groups.
Because the high‐ and low‐profit farms had similar costs, almost all of the profit difference
between these two groups was due to income differences (96.5% of difference due to income and
3.5% due to costs). Crop income can vary due to yield, price, and operator percentage. Comparing
the high‐ versus low‐profit farms most of the difference is due to yield and the least amount is due
to price. Higher operator percentages are an indication of either owned or cash rented land and
thus we would expect higher land costs in this situation. The high‐ and mid‐profit farms have
comparable operator percentages (89.0% and 88.8%) and they have similar land costs. The low‐
profit farms have a lower operator percentage (82.3%) and a comparably lower land cost (i.e., they
give up some of the bushels in lieu of paying rent). High‐profit farms had the highest acreage with …
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