When Will Non-Land Crop Costs Decline?

11 months ago, Gary Schnitkey, University of Illinois Ag Economists, wrote an article reviewing previous periods of non-land cost rises and subsequent reductions after the corn supply shock abated which preceded the cost rise. Two time periods had rapid non-land cost increases, 1972-1982 and 2006-2013. From 1972 to 1982 non-land costs for corn production increased from $85 to $236, more than double. From 1982 to 1988 those same costs did decline but by 18%, approximately 4% annually.

From 1996 to 2005 non land costs remained flat averaging$252 per acre for corn, before they started to rise in 2006. Schnitkey estimated that 2013 would be the peak cost year at $615/acare. If that is correct and cost declines following the same pattern as 1982-1988, we can expect to see corn non-land costs will drop to $504, but not till 2019. Annual declines of only $18.50 are not large enough to allow break-even at current corn prices and cash rental rates. Cash rental rates arelikely to decline over the next few years. How much would only be a guess.


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