The following budgets represent what are believed to be “typical” cost/return budgets for commercial-size producers using production practices that are expected to provide above average yields. Adjustments may be needed to account for individual farm productivity, size of operation, and alternative production practices.

Crop prices and operating cost estimates are based on FAPRI Representative Farms data, survey information from a variety of sources (University of Missouri extension specialists, farm supply dealers, producers, USDA cost data, etc.), machinery economic-engineering cost estimates, and FAPRI economic baseline projections.

October 2006 supply/demand projections suggested favorable grain and soybean price outlook for 2007 crop production. These long-range price projections were adjusted to provide estimated average Missouri farm prices. However, volatile markets can result in prices higher or lower than those used in the budgets. Prices received also depend upon changing market outlook and timing of sales. Basis (spread between cash and futures prices) also varies considerably and can result in notable differences in cash bids at different locations.

In recent months, fuel prices have moderated and nitrogen fertilizer prices are somewhat lower than last year. Other fertilizer prices remain stable. Seed costs, especially for biotech varieties, remain relatively high. Higher costs are anticipated for some chemicals. Interest rates increased from last year and labor costs continue to rise.

Real estate charges are calculated as capitalized rent returns on estimated land value. Estimated real estate values are determined by the University of Missouri and USDA land value and rent surveys.

The landowner’s costs (taxes, insurance, etc.), along with returns on investment, are assumed to be covered by the capitalized returns calculation.

Crop Production Budgets
The crop budgets are based on typical production practices and machinery used by farms with 1700-2000 crop acres located in north, central and southwest Missouri. Smaller farms that use smaller equipment and custom hire more field operations tend to have somewhat higher per acre production costs. Southeast Missouri farm size, equipment mix, and production practices also differ slightly. Corn, soybean and grain sorghum budgets assume one or two tillage passes prior to planting. Wheat and double-crop soybean budgets assume no-till planting. Emerging trends (included in the budgets) appear to be larger combines, use of split herbicide applications, and increasing ownership of spraying equipment, large grain carts, and semi-trucks.

Forage Budgets
Forage crop mix, forage acres per farm, and equipment lines tend to be somewhat different in northern and southern Missouri. Northern crop/livestock farms tend to have fewer forage acres than southern Missouri farms, which are primarily livestock (beef/dairy). Since northern forage producers have more grain crop acres, larger tractors are often used in forage production. Although tractor size may be smaller, southern farms tend to have more forage acres and more items of forage equipment. The southern Missouri climate is also better adapted to some warm season forages and fescue seed production.

Crop Price Estimates for 2007/08 Budgets

	Used in Budgets	Estimates for Regional Basis Adjustment
		Central	NE Mo.	NW Mo.	SW Mo.	SE Mo.
Corn, bu.	$ 2.70	$ 2.70	$ 2.70	$2.55	$2.85	$2.85
Soybean, bu.	$ 6.00	$6.00	$6.05	$5.90	$5.90	$6.20
Wheat, bu.	$ 3.50	$ 3.50	$ 3.50	$ 3.50	$ 3.50	$ 3.70
Grain sorghum, bu.	$ 2.54
Corn silage, ton	$24.30

Cost Estimates Used in 2007/08 Budgets

Diesel fuel, farm delivered $2.10/gal.

Gasoline $2.30/gal.

L.P. gas $1.50

Anhydrous ammonia $0.27/lb.

Urea $0.36/lb.

Ammonium nitrate $0.44/lb.

Phosphate $0.26/lb.

Potassium $0.22/lb.

Operating interest rate 8.75%

Unskilled labor (tractor driving, tillage, mowing, etc.) $10/hour

Skilled labor (planting, combining, spraying, etc.) $15/hour

Real estate charges as % of land value (capitalization rate):

Crop production 4.0% to 5.0% of land value

High quality forage production 3.8% to 4.4% of land value

Grass production 2.1% to 2.2% of land value

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