Nov 09 2008
The TRUE Cost of Planting Crops…What You Don’t Know
Ok, so most people think, after looking at yesterday’s blog, that we’re making our money in the field. You could look at the table in two ways: 1) Farmers really aren’t making any money for what they grow, or 2) That’s just the markup that we have to pay as consumers for the food we eat. Both are accurate. We aren’t making any money and I will give you an example of that below. But, you’re also paying an outrageous markup so that CEOs can have a ginormus severance package. We should all be disconcerted about these packages that companies offer since we’re being ripped off every time we buy a can of corn. Sure, people may deserve a retirement package, but are they really worth $20 million or more? Are they really doing such great work that they’re worth all that? I hardly doubt it. Our grandparents used to can their own food and they got along just fine without paying some CEO to instruct them. Not only that, but anyone with a brain and some training could probably do the job. We need to realize what we’re really paying for, because our money’s not going for the food. You could come to our house, buy some corn from us, and still have 90% of the money you were going to spend at the store in your own pocket instead of in some CEOs pocket. The cost to freeze shell corn is minimal and you could spend that extra 90% buying your child a toy or clothes or that new appliance you really need. It adds up over time, and before you know it you have spent much more than if you had gone to your local farmer. We freeze our sweet corn every year. It is enough for the whole year and we’ve managed to save a lot of money. If you figure one can of corn a week (and we probably eat 2 cans a week) at 75¢, we’ve saved $39 a year. Multiply that by all of the different vegetables you eat. That’s a lot of money. Plus, it makes a difference when gas has been $3 a gallon. That $39 is a tank of gas for us.
Alright, a little off topic, but I needed to make that point. It’s important that consumers are aware of where their money is really going.
Now, what does it cost us to raise a crop? How much do we spend? And how much do we make off of our crops? I have calculated everything based on our area, of course, because I’m not very knowledgeable about average costs for the different areas of the country. I can just tell you what I know we have spent, but I felt as though if I used formulas it would be more credible. The formulas I needed to use came from the Iowa Extension office and if you feel as though they’re incorrect, I encourage you to Google it. You will find the same things I did.
Ok, so I am going to calculate everything based on our John Deere 4010, which is what we usually use to plant our crops. The only reason we would not use this tractor is if it is incapacitated or if we’re running two tractors. Either way, our other tractor is larger so the costs would be increased. This example is using a farm of 100 acres to keep the numbers simple. I think you’ll be shocked when you see how it works. Here goes nothing.
First, we have to figure out how many bushel we will raise. The average around here is 120 bushel/acre. So, our figurative crop will make 12,000 bushel. This will be important later.
|
Item |
Description | Total Cost |
| Seed |
$250 per bag of 80,000 kernelsàIdeally you want 28,000 kernels/acre with 30 inch row spacing. You’ll need 2.8 million kernels for 100 acres. You need 35 bags of corn. |
$8,750 |
| Gas to Plant |
The formula is 0.044 x Maximum PTO horsepower (90 hp for ours) x Cost of Fuel=Cost to Plant per Hour 0.44 x 90hp = 3.96 gal/hr x $3.60/gal = 14.26/hr Next, you can plant 6 acres/hr 100 acres / (6 acres/hr) = 16.67 hours Now you need to multiply the Cost per Hour by the Number of Hours 14.26/hr x 16.67 hours = $237.71 |
$237.71 |
| Lubrication |
This is 15% x Cost per Hour x Number of Hours .15 x 14.26/hr x 16.67 hours = $35.66 |
$35.66 |
| Cost to Harvest |
The multiplier for combining is 1.45 according to the Iowa Extension office. Multiply that by the Cost per Gallon, then by the Number of Acres. 1.45 x $3.60/gal x 100 acres = $522 *If you hire someone to custom combine, it is $30/acre. This would be $3,000, but I am going to use the cost to do it yourself. |
$522 |
| Hauling |
Most farmers do not invest in a semi because it will only be used a few times a year. Instead, they hire semi drivers to haul their crops to the elevator. A semi can hold 900 bushel of corn. We are charged 30¢ per bushel. .30 x 12,000 bushel (what we figured we raised above) = $3,600 |
$3,600 |
It doesn’t seem so bad thus far, does it? Well, here come the big expenses.
|
Fertilizer |
If we want to raise that 120 bushel/acre that I mentioned above, we have to fertilize. We have to have NPP for corn—Nitrogen, Phosphorus, and Pot Ash. Here are the necessary figures PER ACRE: 150 lbs. Nitrogen at $1.00/lb 50 lbs. Phosphorus at $1.00/lb 50 lbs. Pot Ash at 90¢/lb. So, (150 x 1) + (50 x 1) + (50 x .90) = $245 per acre $245/acre x 100 acres = $24, 500 for the whole tract |
$24,500 |
| Spray |
Not only do you have to fertilize your crop, but you also have to spray to prevent grass and weeds from growing and choking out the corn. Spray costs $30 per acre. $30/acre x 100 acres = $3,000 |
$3,000 |
| Insurance |
Insurance is necessary to supplement your costs if your crop does not do very well or if you have to replant, as was the case around here. It’s like having insurance on your car. If you get in a wreck, it will help with the costs of repairs. Crop insurance is $40 an acre. So, $40 x our 100 acres = $4,000 Now, I know what a lot of people are thinking at this point; we get a lot of money from crop insurance. Well, that not really true. Last year we received $845, and the year before we got $1,300. It doesn’t really make that much difference. |
$4,000 |
Ok, so now we have all of the expenses calculated. It’s time to figure income and then subtract the expenses. Before, I said that we raised 120 bushel/acre, making a total crop raised of 12,000 bushel. I looked at the futures yesterday, which is what the price is based on, and corn was bringing $3.84/bushel.
Therefore, 12,000 bushel x $3.84/bushel = $46,080.
Now we subtract our expenses (and I’m going right down the list).
$46,080 - $8,750 - $237.71 - $35.66 - $522 - $3,600 - $24,500 - $3,000 - $4,000 = $1,434.63.
We made $1,435 off our crop, and it took us 120 days, the growing period for corn, to earn that money. That’s $12 a day! For those of you who think we’re getting rich our here, you’re sorely mistaken! People have this belief that farmers make a lot of money and I hope that this example has proven you WRONG. Plus, none of the figures account for wear and tear on the machinery. Actually, we’ve just come to expect that our equipment will break down during this most needed time and the rain will come, setting us back another week. That’s just how it goes sometimes. Furthermore, I didn’t calculate anything for labor because it’s just what we do.
So, we’ve made $1,434 for the year on our corn and had 100 acres tied up for 3 months. I really don’t think that many people would do this job if they knew how little income we have. Plus, we have to make our farm payment with that money. Do you really think that money goes a long way towards a $50,000 a year farm payment, because it doesn’t. Most middle-class people don’t have more than $15,000 or $20,000 worth of payments a year.
The next time you’re on the Internet, search for information about local farms and Farmer’s Markets. You’ll be better off to give your money to the farmers directly than to give it to the CEOs of the corporations. Plus, the food is much better for you. I’ll blog about all the chemicals that are used in processed foods soon. Hopefully then you’ll see that fresh food is better.
Once again, Happy Eating!
(1,482)
2 Responses to “The TRUE Cost of Planting Crops…What You Don’t Know”
Leave a Reply
You must be logged in to post a comment.
Not A Member? Register for Free!
Your posts really give me a lot of (pardon the pun) food for thought. I have always been a proponent of growing what you eat and hope to someday produce the majority of my own food.
You’re absolutely right about corn. It freezes beautifully!
I hope these posts give thousands of people “food for thought.” You really will save money by raising your own food. Plus, it’s so much better for you. Homegrown food doesn’t have the chemicals on it to preserve it for shipment and time sitting in the store. And I always feel better during the summer and fall when we’re eating our own food out of the garden. You’d be surprised, but I have high blood pressure and my blood pressure is stable during the time that I’m eating our own vegetables. I am doing research right now for another blog to show the number of cases of cancer and other diseases that are attributed to the chemicals used on packaged foods. Not to mention the steroids and hormones that hog and cattle farms inject into the animals. That definitely CANNOT be good for us!!!