By Archie Flanders, Agricultural Economist
Recent years of low crop prices have been partially offset by reduced production costs. Net returns present two distinct eras: One period is ‘years subsequent to 2006’ with the other period being ‘years prior to 2006’. After favorable net returns during 2011-2013, low commodity prices are reducing net returns to levels which are causing difficulties in meeting production costs. Comparative analysis indicates total costs, both with and without land rental costs. Production on land that is owned has profit potential at current low prices. On rented land, market revenue meets obligations for annual production inputs, but typical capital expenditures for equipment lead to an expected reduction in equity for producers.
Additional information for costs and net returns trends can be found here.