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More Corn, More Profit?

University of Illinois Farmdoc reviews the relationship of profit and number of corn acres planted

Published on: Apr 19, 2013

Issued by Bradley L. Zwilling and Dwight D. Raab, Illinois FBFM Association Department of Agricultural and Consumer Economics, University of Illinois

Crop rotations change from year to year for a number of reasons. Economics, dealing with weed and disease pressures, the installation of drainage tile, having a place to apply manure...all are reasons that a producer might vary the number of acres devoted to any single crop enterprise in any single year. Geographic factors can also have an impact on crop rotations. Large areas of southern Illinois can easily fit double crop soybeans into a rotation while that feat would be very difficult in most of northern Illinois.

Todays' post will review some of this data and review 2011 in particular. This group of 782 farms are from better soils in central Illinois with negligible contributions from a livestock enterprise. Minimum farm size was 180 acres of row crop production.

University of Illinois Farmdoc reviews the relationship of profit and number of corn acres planted
University of Illinois Farmdoc reviews the relationship of profit and number of corn acres planted

When abundant detailed enterprise analysis information is not available there are other means to gain insight into this data. For this work, groups were established based on the percentage of land devoted to the production of corn. Those five groups are:

Group A - less than 46% corn acres

Group B - 46% to 55% corn acres

Group C - 56% to 65% corn acres

Group D - 66% to 75% corn acres

Group E - greater than 75% corn acres.

Refer to Table 1 as we review some of the characteristics of this group of farms. Group A with the least percentage of corn acres contained only 9.2% of the farms. This group is a bit more diverse in its crop enterprise mix with 8% of acres devoted to crops other than corn or soybeans. The other four groups were nearly exclusively made up of only corn and soybean enterprises. Group E contained just under 5% of the farms. Group B alone contained just over half of the farms and just over 75% of the farms were in Groups B and C.

Crop returns per acre did vary but had a mostly upward trend as the percentage of corn acres increased with a $921 per acre crop return for Group A and ranging to $1,040 for Group E. Interestingly, corn yields had no discernible trend as the percentage of corn acres increased while soybean yields appear to increase as the percentage of corn acres increased.

A review of some of the expenses show that soil fertility shows an increase in cost as the percentage of corn acres increases as does seed expense, drying expense, and crop insurance as one might expect. Machinery depreciation increased, but only slightly, and cash rent varied considerably but was the highest for Group E. In the end, management returns show a range of only $27 per acre with Group E the highest at $268 and Group A and C following closely at $266 and $265. This data represents only a single year, but management returns for 2011 provide little evidence that higher management returns are due to higher percentages of corn acres in crop rotations.

More Corn, More Profit?

This entry first appeared on the University of Illinois FarmDoc site. Click here to view the original post, More Corn...More Profit???