United States

Department

of Agriculture

www.ers.usda.gov

Electronic Report from the Economic Research Service

Statistical

Bulletin

Number

974

August

2001

Characteristics and Production

Costs of U.S. Corn Farms

Linda F. Foreman1

In this report... The production costs for a bushel of corn

ranged from an average of $1.19 per bushel for those

farmers in the lowest quartile to $3.67 per bushel for corn

farmers in the highest quartile, ranked by production costs

per bushel. Producers with high corn production costs per

bushel tended to have both lower than average yields and

higher than average corn costs per acre. Corn producers in

the Heartland and Prairie Gateway had lower corn

production costs per bushel than corn producers in the

Northern Crescent and Southeast. Part-time farmers and

farmers with small corn acreage tended to have high corn

production costs per bushel.

Keywords: corn, costs of production, cost variation, corn

production practices, farm characteristics.

1

Agricultural Economist, Resource Economics Division, Economic

Research Service, USDA
2 Economic Research Service, USDA

Overview 

In 1996, corn was the leading U.S. crop in terms

of both acreage and production value. Favorable

weather conditions in 1996 resulted in an aboveaverage national corn yield of 127.1 bushels per

harvested acre. At $2.71 per bushel, the 1996

market-year corn price was above average but

down from the previous year (U.S. Dept. of

Agriculture, National Agricultural Statistics

Service Web site). In 1996, operating and

ownership costs for producing corn ranged from

an average of $1.19 per planted bushel for 25

percent of the growers with the lowest costs to an

average of $3.67 per planted bushel for the 25

percent of growers with the highest costs. Some

79 percent of U.S. corn farmers produced 93

percent of the Nation’s corn for less than $2.71

per bushel (fig. 1)

1

. Corn production costs per

acre totaled $230.38 in 1996, compared with

gross production value of $369.70 per acre for

corn, including corn silage. The capital

cost for machinery and equipment was the largest

component of production costs per acre. Fertilizer

expenditures per acre were the second largest cost

item, followed by chemical, seed, and fuel

expenditures.

With the passage of the 1996 Federal Agricultural

Improvement and Reform (FAIR) Act, the

Government removed acreage restrictions on

program crops and instituted production

flexibility contract payments that are not linked to

commodity grain prices (Young and Westcott,

1996). Under the FAIR Act, grain producers face

increased risk from low grain prices. Prior to the

FAIR Act, deficiency payments rose when grain

prices were low, in effect stabilizing farmers’

incomes. Unlike deficiency payments, contract

payments are fixed under the FAIR Act; thus,

farmers’ incomes may be more volatile as grain

prices fluctuate. Between 1996 and 2000, the

marketing-year average corn price dropped from

$2.71 to $1.85 per bushel. The decline in grain

prices increased the financial pressure on many

 

1 Costs exclude storage and marketing costs.

farmers, prompting government officials to enact

emergency assistance programs to aid them. 

Government officials, researchers, and extension

agents need financial information on various

categories of farmers to effectively develop and

implement programs that help farmers remain

financially viable. Studies by Plumley (1991),

Purdy (1997), and Sonka (1991) and their

colleagues have shown that one factor in

determining farm financial success is financial

efficiency (see glossary). Farmers who are more

successful tend to maintain lower ratios of costs to

output, while less successful farmers have higher

costs per unit of output.

The objective of this report is to present

information about the costs of producing corn in

the United States and to examine how these

production costs vary among different segments

of the farm population. Factors that contribute to

the variability in corn production costs per bushel

are identified for various categories of farm

producers. The categories used in this report are

characterized by corn production costs per bushel,

region, farm typology, and farm acreage (see

glossary). Corn producers are ranked by their

corn production costs per bushel to analyze

factors associated with low and high production

costs. Corn producers in different regions are

compared to gain insights into regional variations

in production costs. Farm typology is used to

examine the relationship between farm types and

corn production costs. Characteristics of farms

based on planted corn acreage are compared,

since farms may vary by acreage. Data in this

report are derived from a special corn cost-ofproduction survey undertaken as part of the 1996

Agricultural Resource Management Study

(ARMS) (see glossary). This was the latest

survey to collect data on farmers’ costs for corn

production.

This report uses corn production costs as an

indicator of financial success and assesses the

characteristics of producers who are likely to be

successful corn growers. 
Economic Research Service, USDA 3

Production costs are the sum of the operating and

ownership costs for inputs provided by operators,

landlords, and contractors (see glossary).

Operating costs are the sum of costs that vary

directly with the amount of corn produced. 

Ownership costs are costs related to capital items

that are consumed during the annual production

process, such as farm machinery and equipment.

Production costs are used for this report since

farmers must be able to meet their short-term

operating costs and, in the longer run, replace

assets consumed during the production process in

order to maintain viable farming operations. 

Since ownership costs are fixed in the short term,

most farmers can remain in business for several

years as long as they can meet their short-term

obligations. In the long term, producers wishing

to maintain successful farming operations must be

able to both meet their operating costs and replace

capital assets consumed during the production

process.

In the analysis for this report, ERS follows the

computational standards recommended by the

American Agricultural Economics Association

(AAEA) Task Force on Commodity Costs and

Returns (AAEA, 1998).
4 Economic Research Service, USDA

Costs Varied Significantly Among Corn Producers

Corn yields and enterprise size distinguished low-cost producers from mid- and high-cost producers.

For analysis by cost, corn producers are ranked

based on production costs per bushel and grouped

into quartiles. Mid-cost producers occupy the two

middle quartiles while low- and high-cost

producers fall into the end quartiles. Low-cost

growers produced 35 percent of total corn

production for $1.43 or less per bushel, while

high-cost growers produced 8 percent of the corn

with production costs exceeding $2.50 per bushel

(table 1). High-cost producers averaged $3.67 in

costs per bushel in contrast to low-cost producers,

who averaged $1.19 per bushel, a difference of

$2.48. Among the regions, the Heartland had the

smallest percentage of its corn producers in the

high-cost category, while the Northern Crescent

and Southeast had over one-third of their corn

producers in the high-cost category (fig. 2).

Differences in yields and costs per acre determine

producers’ rank in the cost distribution. As table

1 shows, high-cost producers had yields averaging

72 bushels per acre in 1996 compared with

average yields of 154 bushels per acre for lowcost producers. Differences between actual and

expected yields indicate the extent that

uncontrollable factors, such as weather and pest

infestations, may have affected yields. Yields of

high-cost producers were nearly 50 bushels below

their expected yields in 1996, while the yields of

low-cost producers exceeded their expectations by

14 bushels. High-cost producers’ expected yield

of 120 bushels per acre was significantly less than

low-cost producers’ expected yield of 140 bushels

per acre. Additionally, high-cost farms had

production costs averaging nearly $80 per acre

higher than low-cost farms. Even if each category

of farmers had achieved its expected yields, highcost producers would still have production costs

exceeding those of the low-cost producers by

$0.87 per bushel. Thus, despite the lower-thanexpected yields of many high-cost producers

during 1996, their relative costs and expected

yields suggest that many of them are likely to be

chronic high-cost growers.

The $80 difference in the production costs per

acre between high- and low-cost corn producers

stems mostly from four expenditure items: (1)

capital recovery of machinery and equipment; (2)

fertilizer; (3) fuel, lube, and electricity; and (4)

repairs. Capital recovery, an estimate of the

annual value of machinery and equipment that is

consumed, accounted for nearly 40 percent of the

cost difference. The annual machinery and

equipment costs per acre for high-cost producers

were nearly 65 percent higher than for low-cost

producers. On average, low-cost producers had

just over 200 corn acres over which to spread

their fixed machinery costs in comparison to 134

acres for high-cost producers. The fertilizer

expenditures per acre were lowest for producers

in the low-cost category. Low-cost producers

may have obtained fertilizer at lower prices than

high-cost producers, since there were no

significant differences in fertilizer use between

producers in these categories (table 2). Higher

fuel expenditures per acre for high-cost producers

may be attributed to their greater percentage of

irrigated acreage (table 3) and their higher

number of field trips (table 2).

More low-cost producers planted corn after

soybeans, while more high-cost producers

followed corn with corn. High-cost producers

were generally older and less educated than lowcost producers. High-cost corn producers were

twice as likely to be 65 years or older than lowcost producers. Also, 35 percent of high-cost

producers were retired or had nonfarm

occupations, compared to 18 percent of low-cost

producers.
Economic Research Service, USDA 5
6 Economic Research Service, USDA

Table 1–Corn production costs and returns on 1996 ARMS corn farms, by cost group

Item Low (a) Mid (b) High (c)

Percentage of corn farms 25 50 25

Percentage of corn acres 29 bc 54 ac 16 ab

Percentage of corn production (bushels) 35 bc 57 ac 8 ab

Size:

 Total operated acreage per farm 640 613 583

 Planted corn acreage per farm 206 c 212 c 134 ab

Yield in bushels per acre:

 Actual 154 bc 135 ac 72 ab

 Expected 140 c 137 c 120 ab

Production costs per bushel (dollars)

 Actual 1.19 bc 1.83 ac 3.67 ab

 Expected 1.31 bc 1.79 ac 2.18 ab

Costs and returns per planted acre (dollars):

 Gross value of production 431.57 bc 379.52 ac 226.01 ab

 Operating costs 129.55 bc 172.41 a 175.60 a

 Seed 25.95 27.29 c 25.78 b

 Fertilizer 37.69 bc 50.91 a 50.91 a

 Soil conditioners 0.14 c 0.15 c 0.21 ab

 Manure *0.64 #0.45 #0.99

 Chemicals 23.23 bc 29.24 a 28.91 a

 Custom operations 8.88 bc 12.65 a *11.12

 Fuel, lube, and electricity 16.81 bc 27.33 a 28.48 a

 Repairs 10.80 bc 16.80 ac 21.34 ab

 Purchased irrigation water #0.78 #0.14 0.00

 Interest on operating capital 3.14 bc 4.15 a 4.22 a

 Hired labor 1.48 bc *3.32 a 3.64 a

 Ownership costs 53.84 bc 73.62 ac 86.98 ab

 Capital recovery: machinery, equipment 48.06 bc 66.35 ac 78.80 ab

 Taxes and insurance 5.78 bc 7.27 a 6.98 a

 Production costs 183.39 bc 246.02 ac 262.58 ab

 Value of production less operating costs 302.02 bc 217.11 ac 50.42 ab

 Value of production less production costs 248.19 bc 133.49 ac -36.57 ab

Coefficient of Variation (CV) = (Standard Error/Estimate)*100.

* indicates that CV is greater than 25 and less than or equal to 50.

# indicates that CV is greater than 50.

a, b, c indicates that estimates are significantly different from the indicated group at the 90 percent or better level using the t-statistic.
Economic Research Service, USDA 7

Table 2–Production practices on 1996 ARMS corn farms, by cost group

Item Low (a) Mid (b) High (c)

Seeding rate per acre (kernels) 27,057 27,655 26,637

Row width (inches) 32.4 c 31.7 32.4 a

Fertilizer use (percentage of farms):

 Nitrogen 93 97 90

 Phosphorous 73 b 81 a 78

 Potassium 82 87 83

 Manure 39 b 19 ac 33 b

Test nitrogen level (percentage of farms) 9 b 17 ac 12 b

 Use recommended level (percentage of farms) 77 63 65

Fertilizer quantity on reporting farms:

 Nitrogen (lbs/acre) 125 b 139 a 128

 Phosphorous (lbs/acre) 68 b 80 a 74

 Potassium (lbs/acre) 54 55 49

Chemical use (percentage of farms):

 Herbicides 93 95 91

 Insecticides 19 26 19

Chemically treated acres on reporting farms:

 Herbicides (acre-treatments) 2.7 2.7 2.6

 Insecticides (acre-treatments) 1.0 1.2 1.1

Custom operations (percentage of farms):

 Any custom operation 48 b 58 ac 40 b

 Preparation, cultivation, or planting 5 9 6

 Fertilizer/chemical 27 b 36 ac 20 b

 Harvest 22 22 c 14 b

 Drying 13 b 20 a 14

Total labor hours per acre 2.1 bc 2.6 ac 3.5 ab

 Unpaid 1.9 bc 2.3 ac 3.1 ab

 Paid .2 bc .4 a .4 a

Farms with paid labor (percent) 18 17 14

Tillage systems (percentage of farms):

 Conventional 64 69 69

 Reduced 24 c 23 c 12 ab

 Conservation 36 31 31

 No-till 10 12 11

Machinery:

 Planter width (rows) 6.6 c 6.8 c 5.5 ab

 Harvester width (rows) 4.6 b 5.0 ac 4.5 b

 Tractor horsepower (largest used) 141 c 145 c 127 ab

 Speed of tillage/planting operations (acres/hr) 8.3 c 7.7 c 5.5 ab

 Speed of harvest operations (acres/hr) 5.1 c 4.8 c 3.2 ab

 Total trips across field (number) 7.7 bc 8.2 a 8.1 a

 Tillage and planting trips (number) 3.3 c 3.5 3.8 a

Drying:

 Bushels dried (percentage) 47 b 62 a 54

 Moisture removed (percentage points) 2.2 b 4.1 ac 2.7 b

Coefficient of Variation = (Standard Error/Estimate)*100.

* indicates that CV is greater than 25 and less than or equal to 50.

# indicates that CV is greater than 50.

a, b, c indicates that estimates are significantly different from the indicated group at the 90 percent or better level using the t-statistic.
8 Economic Research Service, USDA

Table 3–Characteristics of 1996 ARMS corn farms and corn producers, by cost group

Item Low (a) Mid (b) High (c)

Corn acreage (percentage):

 Dryland 92 b 84 a 82

 Irrigated 8 b 16 a 18

Production value:

 All commodities (dollars per farm) 256,004 c 222,144 c 156,844 ab

 Corn (dollars per farm) 84,366 c 87,957 c 37,267 ab

 Percentage of total production 31 b 44 ac 27 b

Corn acres harvested for grain (percentage) 95 c 97 c 90 ab

Corn acres harvested for silage (percentage) 5 c 3 c 10 ab

Precision agriculture (percentage of farms):

 Variable rate technology/soil grid sampling *6 bc 11 ac *2 ab

 Harvested using yield monitor *8 6 *3

Previous crop (percentage of farms):

 Soybean 47 c 49 c 26 ab

 Corn 21 bc 28 a 31 a

 Other 32 c 23 c 43 ab

Commodities per farm (number) 3.1 3.0 3.2

Percentage of corn farms with:

 Corn under contract 18 24 c 16 b

 Cattle 61 b 45 ac 66 b

 Hogs 17 20 c 11 b

 Dairy 22 12 c 24 b

 Soybeans 56 67 c 49 b

 Hay 66 b 53 a 56

 Wheat 17 bc 26 a 33 a

Operator occupation (percentage)

1

:

 Farming 82 c 81 c 65 ab

 Non-farm *15 *15 *20

 Retired #3 #4 #14

Operator age (percentage):

 Less than 50 years 54 48 48

 50 to 64 34 33 26

 65 or more 12 bc 18 a 25 a

Operator education (percentage):

 High school or less 56 c 55 c 71 ab

 Some college 27 30 c 17 b

 Completed college 17 16 12

Financial characteristics per farm:

 Net cash income (dollars) 64,929 bc 41,446 ac 24,589 ab

 Equity (dollars) 747,474 c 557,132 c 473,570 ab

 Debt-to-asset ratio (percent) 11 bc 18 a 11 a

 Rate of return on equity (percentage) 0 b -3 a -5

 Government payments (dollars) 6,573 6,739 c 4,803 c

 Corn crop insurance (percentage) 51 b 66 a 53

Coefficient of Variation = (Standard Error/Estimate)*100.

* indicates that CV is greater than 25 and less than or equal to 50.

# indicates that CV is greater than 50.

a, b, c indicates that estimates are significantly different from the indicated group at the 90 percent or better level using the t-statistic. 1

May not add to 100 since percentages for hired managers are not shown.
Economic Research Service, USDA 9

Regional Characteristics Affect Production Costs

Differences in yields and production practices influenced regional variations in corn production costs per

bushel.

Heartland corn farmers had the lowest average

corn production costs at $1.14 per bushel,

followed by Prairie Gateway farmers with $1.29

per bushel and Northern Crescent farmers with

$1.38 per bushel (table 4). Southeast corn

farmers had the highest average production costs,

at $1.52 per bushel, despite their lower levels of

seed and fertilizer inputs (table 5). In 1996, corn

producers in the Heartland and Prairie Gateway

had a cost advantage over Northern Crescent and

Southeast corn producers (fig. 3). Excluding the

marketing and storage costs, over 80 percent of

the lowest cost corn producers in the Heartland

and Prairie Gateway produced corn for less than

the $2.71 per bushel market-year price for 1996,

compared with roughly 64 percent of Northern

Crescent corn producers and 53 percent of

Southeast corn producers.

The Heartland, with just over half of all corn

producers and corn acreage, produced just over

70 percent of all U.S. corn. Heartland corn

producers had the lowest production cost per

bushel in 1996 due to their high average yield of

138 bushels per acre and costs that averaged

$226.52 per acre. The Heartland is especially

well suited to corn production due to the region’s

climate and soil types. Temperatures there are

moderate and the region’s rainfall is sufficient

for corn production (Neild and Newman, 1990). 

Corn accounts for just under 50 percent of the

gross value of production on the region’s corn

farms (table 6). Over 80 percent of corn

producers in the Heartland also raise soybeans. 

Farmers raising both corn and soybeans can

frequently use some farm machinery for both

crops, allowing them to spread their machinery

costs over more acreage. This factor may

contribute to the competitiveness of Heartland’s

corn producers.

In the Prairie Gateway, where nearly 15 percent

of U.S. corn is grown, corn producers irrigate 72

percent of the crop due to this region’s relatively

arid climate. Irrigation raises the production cost

per acre significantly due to the expenditures

needed to operate, repair, and replace irrigation

equipment. The high expected corn yields of the

Prairie Gateway producers offset their high

production costs per acre, leaving their expected

costs per bushel close to the average for the

Heartland and Northern Crescent corn producers.

The Prairie Gateway has the fewest corn

producers, but on average its producers operate

much larger farms (1,417 acres) and plant more

corn acres per farm (328 acres) than corn

producers in other regions. This allows Prairie

Gateway’s corn growers to spread the ownership

costs of irrigation equipment and other

machinery over more acreage so that they can be

competitive with dryland producers.

Although nearly 25 percent of all corn farmers

are located in the Northern Crescent, they

produced just 12 percent of the 1996 corn

bushels due to their relatively low yields and

their small corn enterprises, which averaged 108

acres per farm. In 1996, Northern Crescent corn

producers’ average yield fell short of their

expected yield by 22 bushels per acre. Farmers

were asked to report costs on corn acres that

were planted with the intention of harvesting the

corn for grain. Sixteen percent of corn acreage

intended for grain on Northern Crescent’s farms

was harvested for silage. With nearly threefourths of Northern Crescent's corn producers

raising cattle, and nearly half reporting dairy

operations, most of the producers harvesting corn

silage probably used the silage as feed. The

relatively high percentage of corn acreage

harvested for silage in the Northern Crescent

significantly raised the region’s per bushel

production costs, since production costs,

including those for silage, are included in the per

bushel figures (see glossary).
10 Economic Research Service, USDA

Southeast corn producers have the highest

expected and actual costs per bushel. Although

their production costs per acre are closest to

those of the Heartland producers, Southeast corn

producers have the lowest average expected corn

yield, while their actual yields match those in the

Northern Crescent. Southeast corn yields are

reduced in part due to heat, the unpredictability

of rainfall during the critical tasseling and silking

stage of corn production, and the lack of irrigated

corn acreage (NCCES, 1995). Inputs on

Southeast corn operations tend to be lower

compared with other regions, with less seed and

fertilizer used and fewer corn farms applying

chemicals (table 5). Southeast producers also

tend to plant fewer corn acres (66 acres per farm)

and use smaller farm machines. Capital recovery

costs per acre are higher for this region compared

with the Heartland and Northern Crescent

because Southeast growers have fewer acres over

which to spread their fixed investments. 

Southeast corn producers are also generally

older, less educated, and more likely to work in

nonfarm occupations than other corn producers.
Economic Research Service, USDA 11

Table 4–Corn production costs and returns per acre from 1996 ARMS corn farms, by region

Item Heartland (a) Northern Crescent (b) Prairie Gateway (c) Southeast1 (d)

Percentage of corn farms 57 bcd 26 acd 7 abd 11 abc

Percentage of corn acres 68 bcd 15 ad 13 ad 3 abc

Percentage of corn production (bushels) 71 bcd 12 a 14 ad 3 ac

Size:

 Total operated acreage per farm 602 bcd 368 ac 1,417 abd 419 ac

 Planted corn acreage per farm 231 bcd 108 acd 328 abd 66 abc

Yield in bushels per acre:

 Actual 138 bd 104 ac 143 bd 104 ac

 Expected 137 bcd 126 acd 155 abd 111 abc

Production costs per bushel:

 Actual 1.14 bcd 1.38 a 1.29 a 1.52 a

 Expected 1.15 d 1.14 d 1.19 d 1.42 abc

Costs and returns per planted acre (dollars):

 Gross value of production 385.35 b 297.11 ac 429.94 bd 346.33 c

 Operating costs 159.69 bc 147.70 acd 190.06 abd 164.34 bc

 Seed 27.32 bd 25.10 acd 27.23 bd 21.73 abc

 Fertilizer 49.90 bcd 41.43 ad 42.33 ad 60.07 abc

 Soil conditioners 0.09 bcd 0.43 acd *0.01 abd *0.99 abc

 Manure *0.44 bc *2.08 ad D *0.23 b

 Chemicals 28.57 26.37 26.50 25.63

 Custom operations 10.75 9.33 *14.28 *10.10

 Fuel, lube, and electricity 22.35 c 20.82 c 43.17 abd 19.09 c

 Repairs 14.41 cd 14.82 c 24.12 abd 15.85 ac

 Purchased irrigation water 0.00 0.00 #2.40 D

 Interest on operating capital 3.87 bc 3.53 acd 4.53 abd 3.86 bc

 Hired labor 1.98 bcd 3.79 ad *5.50 a 6.79 ab

 Ownership costs 66.82 cd 68.39 cd 89.77 abd 78.46 abc

 Capital recovery: machinery, equipment 60.50 cd 61.90 cd 79.69 ab 70.37 ab

 Taxes and insurance 6.32 cd 6.49 cd 10.09 ab 8.09 ab

 Production costs 226.52 bcd 216.09 acd 279.84 abd 242.81 abc

 Value of production less operating costs 225.66 b 149.41 ac 239.88 b 181.98

 Value of production less production costs 158.84 bd 81.02 ac 150.10 b 103.52 a

D=Data insufficient for disclosure.

Coefficient of Variation = (Standard Error/Estimate)*100.

* indicates that CV is greater than 25 and less than or equal to 50.

# indicates that CV is greater than 50.

a, b, c, d indicates that estimates are significantly different from the indicated group at the 90 percent or better level using the t-statistic. 1 Southeast includes Eastern Uplands and Southern Seaboard.
12 Economic Research Service, USDA

Table 5–Production practices on 1996 ARMS corn farms, by region

Item Heartland (a) Northern Crescent (b) Prairie Gateway (c) Southeast1 (d)

Seeding rate per acre (kernels) 27,527 d 27,591 d 27,264 d 24,828 abc

Row width (inches) 32.0 d 31.6 d 31.6 d 34.4 abc

Fertilizer use (percentage of farms):

 Nitrogen 96 89 96 94 

 Phosphorous 81 c 86 c 31 abd 87 c

 Potassium 86 c 86 c 69 abd 87 c

 Manure 20 bc 58 acd *7 abd 15 bc

Test nitrogen level (percentage of farms) 14 bcd 8 ac 41 abd 8 ac

 Use recommended level (percentage of farms) 56 bc 75 a 81 a 71

Fertilizer quantity on reporting farms:

 Nitrogen (lbs/acre) 134 bc 93 ac 159 abd 125 bc

 Phosphorous (lbs/acre) 78 c 71 c *20 abd 73 c

 Potassium (lbs/acre) 60 c 52 c 36 abd 52 c

Chemical use (percentage of farms):

 Herbicides 97 bcd 94 a 92 a 77 a

 Insecticides 25 bcd 16 ac 36 ab 15 ac

Chemically treated acres on reporting farms:

 Herbicides (acre-treatments) 2.7 bd 2.4 a 2.6 2.0 ac

 Insecticides (acre-treatments) 1.1 1.0 c 1.3 bd 1.0 c

Custom operations (percentage of farms):

 Any custom operation 59 bd 39 ac 65 bd 33 a

 Preparation, cultivation, or planting 9 bcd 6 ad *5 a #2 ab

 Fertilizer/chemical 42 bcd *12 ac 22 ab 14 a

 Harvest 20 *18 22 20

 Drying 21 bcd 14 ad *12 ad *2 abc

Total labor hours per acre 2.5 bd 3.5 ac 2.4 bd 5.1 ac

 Unpaid 2.4 bcd 3.2 ac 1.7 abd 4.4 ac

Paid .2 d .2 d *.6 .7 ab

Farms with paid labor (percent) 17 c 13 c 28 abd *16 c 

Tillage systems (percentage of farms):

 Conventional 67 c 73 c 56 abd 71 c

 Reduced 27 bd 10 ac 28 bd *8 ac

 Conservation 33 c *27 c 44 abd 29 c

 No-till 12 b *7 acd *15 b *16 b

Machinery:

 Planter width (rows) 7.4 bd 5.0 ac 7.7 bd 4.1 ac

 Harvester width (rows) 5.2 bcd 3.7 ac 6.6 abd 3.7 ac

 Tractor horsepower (largest used) 152 bd 123 acd 163 bd 89 abc

 Speed of tillage/planting operations (acres/hr) 8.0 bcd 4.9 ac 10.2 abd 4.2 ac

 Speed of harvest operations (acres/hr) 4.7 bcd 2.9 ac 7.9 abd 2.8 ac

 Total trips across field (number) 8.0 7.9 c 8.3 b 8.0 

 Tillage and planting trips (number) 3.3 bcd 3.6 a 3.8 a 4.1 a

Drying:

 Bushels dried (percentage) 59 bc 48 a *25 ab *43 

 Moisture removed (percentage points) 4.5 bcd 2.4 acd *1.1 ab 0.8 ab

Coefficient of Variation = (Standard Error/Estimate)*100.

* indicates that CV is greater than 25 and less than or equal to 50.

# indicates that CV is greater than 50.

a, b, c, d indicates that estimates are significantly different from the indicated group at the 90 percent or better level using the t-statistic. 1 Southeast includes Eastern Uplands and Southern Seaboard.
Economic Research Service, USDA 13

Table 6–Characteristics of 1996 ARMS corn farms and corn producers, by region

Item Heartland (a) Northern Crescent (b) Prairie Gateway (c) Southeast1 (d)

Corn acreage (percentage):

 Dryland 95 cd 98 c 28 abd 99 ac

 Irrigated 5 cd 2 c 72 abd 1 ac

Production value:

 All commodities (dollars per farm) 216,614 bd 183,699 a 353,754 abd 146,453 ac

 Corn (dollars per farm) 94,596 bcd 32,746 ac 146,845 abd *18,895 ac

 Percentage of total production 46 bd 22 ac 46 bd 17 a

Corn acres harvested for grain (percentage) 99 bcd 83 acd 99 abd 98 abc

Corn acres harvested for silage (percentage) 1 b 16 a D D

Precision agriculture (percentage of farms):

 Variable rate technology/soil grid sampling 11 bd *2 ac *7 b *2 a

 Harvested using yield monitor 6 bd *3 ac *15 bd #1 ac

Previous crop (percentage of farms):

 Soybean 66 bcd 14 a 20 a 18 a

 Corn 19 bc 37 a 46 ad 29 c

 Other 15 bcd 49 ac 35 ab 53 ac

Commodities per farm (number) 3.1 3.3 d 3.1 2.6 b

Percentage of corn farms with:

 Corn under contract 28 bd 8 ac 27 bd *8 ac

 Cattle 45 bd 74 ac 49 b 65 a

 Hogs 24 bcd 9 a *9 a *10 a

 Dairy 8 b 47 ad D 11 b

 Soybeans 81 bcd 36 a 34 a *32 a

 Hay 49 b 78 acd 55 b 52 b

 Wheat 22 c *28 c 49 abd *20 c

Operator occupation (percentage)

2

:

 Farming 80 d 82 d 80 d 50 abc

 Non-farm 16 15 13 #21

 Retired #4 #3 D #21

Operator age (percentage):

 Less than 50 years 51 50 51 *41

 50 to 64 32 34 34 *22

 65 or more 16 16 *15 *38

Operator education (percentage):

 High school or less 56 cd 63 cd 45 abd 80 abc

 Some college 28 d *27 d 29 d *8 abc

 Completed college 16 c 11 c 27 abd *12 c

Financial characteristics per farm:

 Net cash income (dollars) 43,597 d 46,747 d 64,792 d #13,553 abc

 Equity (dollars) 587,616 d 626,978 656,103 d 444,769 ac

 Debt-to-asset ratio (percent) 16 d *12 20 d 9 ac

 Rate of return on equity (percentage) #-1 *-6 c #4 bd #-6 c

 Government payments (dollars) 6,860 bcd 3,368 acd 15,029 abd *2,050 abc

 Corn crop insurance (percentage) 67 d 52 d 67 d *25 abc

D=Data insufficient for disclosure.

Coefficient of Variation = (Standard Error/Estimate)*100. 

* indicates that CV is greater than 25 and less than or equal to 50.

# indicates that CV is greater than 50.

a, b, c, d indicates that estimates are significantly different from the indicated group at the 90 percent or better level using the t-statistic. 1 Southeast includes Eastern Uplands and Southern Seaboard.

2

 May not add to 100 since percentages for hired managers are not shown.
14 Economic Research Service, USDA

Corn Production Costs Differ Across Farm Typology

Differences in yields, inputs, and farm and farmer characteristics lead to differences in production costs

per bushel among the farm typology classes.

Farm typology classifies farms using the annual

value of agricultural sales, farmers’ occupation,

and farm asset values (see glossary). For corn

farms, farm typology and the size of the corn

acreage are positively related. As the value of a

farm’s gross sales increase, the total acreage per

farm and corn acreage per farm increase as well

(table 7). Small family farms, those with annual

sales of $250,000 and under, account for roughly

four-fifths of all corn farms and just over half of

the corn production. Larger family farms have

lower average production costs per bushel than

small farms due to higher yields. Large family

farms and part-time family farms have significant

differences in their expected average production

cost per bushel. Very large farms have the

highest production costs per acre, but they also

have the highest expected and actual yields. 

Very large farms have the highest average fuel

expenditures per acre since a relatively high

percentage of their acres was irrigated. The

Prairie Gateway has the highest percentage of

very large farms (fig. 4).

Part-time farmers, with their small corn plots that

averaged 67 acres, had corn production costs per

acre in the same range as all other farmers. A

high percentage of part-time farmers elected to

have custom work performed on their corn

enterprises, especially custom harvesting (table

8). As a result, part-time farmers had higher

custom-work expenditures per acre than farmers

who listed farming as their major occupation. 

All part-time farm operators had either nonfarm

occupations or nonfarm businesses or were

retired. Many part-time farmers may have found

it more economically feasible to contract for

custom harvesting than performing the work

themselves. Part-time farm operators generally

have smaller equipment and lower horsepower

tractors than other farmers. Nearly half of all

part-time corn farmers are located in the

Heartland, and one out of four in the Southeast. 

Half of all Southeast corn farmers farm part-time.

Operators of the larger corn farms are more

likely to use risk management strategies than

operators of small farms. Diversification is a risk

management strategy used by farmers to mitigate

the production and price risk associated with any

one commodity. Large corn farms are more

diversified than small ones, as shown from the

average number of commodities grown per farm

(table 9). Larger corn operations are also more

likely to insure part of their corn crop to

minimize losses if disaster strikes. A higher

percentage of larger farm operators produced or

sold some of their corn under contract. 

Marketing contracts generally reduce farmers’

exposure to price variations, while production

contracts for specialty corn usually provide for

premium prices.

Small family farms differ from larger family

farms in many characteristics other than size of

the farm operation or the corn enterprise. Parttime operators are less likely to use conservation

or no-till systems than operators of larger farms. 

Use of no-till conserves moisture (NCCES,

1995). Seeding rates on small farms are less than

those on larger farms. Labor hours per acre for

both field operations and overhead are greater on

small farms. Smaller machines and lower

horsepower tractors contributed to more labor

hours expended per acre on small farms, and

operators of small farms have less acreage over

which to allocate their overhead hours. 

Operators of small farms are generally older and

less well educated than their counterparts on

larger farms.
Economic Research Service, USDA 15
16 Economic Research Service, USDA

Table 7–Corn production costs and returns on 1996 ARMS corn farms, by farm typology

Small family farms Larger family farms

 Item

Part-time1 (a) Low sales (b) High sales (c) Large (d) Very large (e)

Percentage of corn farms 23 bde 33 acde 26 bde 12 abce 6 abcd

Percentage of corn acres 8 bcde 19 acd 27 ab 26 ab 20 a

Percentage of corn production (bushels) 7 bcde 17 acd 25 ab 28 ab 23 a

Size:

 Total operated acreage per farm 281 bcde 399 acde 566 abde 1,239 abce 1,938 abcd

 Planted corn acreage per farm 67 bcde 110 acde 192 abde 411 abce 640 abcd

Yield in bushels per acre:

 Actual 111 de 123 de 118 d 139 abc 138 ab

 Expected 129 e 126 de 128 de 137 bc 145 abc

Production cost per bushel (dollars):

 Actual 1.49 bde 1.23 ad 1.30 d 1.11 abc 1.21 a

 Expected 1.28 de 1.20 1.19 1.12 a 1.14 a

Costs and returns per planted acre (dollars):

 Gross value of production 313.97 de 342.94 de 336.31 de 392.20 abc 398.92 abc

 Operating costs 168.15 153.31 e 157.49 e 161.77 e 177.26 bcd

 Seed 25.76 e 24.38 cde 25.67 be 27.04 b 28.40 abc

 Fertilizer 50.32 48.85 45.87 45.77 48.33

 Soil conditioners *0.37 d 0.24 d 0.25 d 0.11 abc *0.21

 Manure #0.24 *0.15 *0.79 #0.76 #0.37

 Chemicals 26.86 d 24.71 de 27.15 d 32.39 abc 28.01 b

 Custom operations *21.13 bcde 10.39 a 9.36 a 8.99 a 10.36 a

 Fuel, lube, and electricity 21.16 21.96 e 23.47 21.59 29.35 b

 Repairs 15.84 16.29 d 16.94 d 13.32 bce 16.63 d

 Purchased irrigation water D D D D D

 Interest on operating capital 4.06 3.70 e 3.76 3.78 4.08 b

 Hired labor #1.20 d 1.17 d *2.07 3.73 ab 5.52

 Ownership costs 71.12 74.41 d 70.85 d 65.26 bc 70.96

 Capital recovery: machinery, equipment 61.55 66.81 d 64.99 d 57.76 bc 65.13

 Taxes and insurance 9.62 c 7.60 ce 5.85 abd 7.50 c 5.83 b

 Production costs 239.32 227.72 e 228.34 e 227.03 248.22 bc

Value of production less operating costs 145.81 bde 189.63 ade 178.82 d 230.43 abc 221.65 ab

Value of production less production costs *74.64 bde 115.21 ade 107.98 de 165.17 abc 150.69 abc

D=Data insufficient for disclosure.

Coefficient of Variation = (Standard Error/Estimate)*100.

* indicates that CV is greater than 25 and less than or equal to 50.

# indicates that CV is greater than 50.

a, b, c, d, e indicates that estimates are significantly different from the indicated group at the 90 percent or better level using the t-statistic. 1 Part-time farms consist of retirement and residential/lifestyle farms plus farms with assets of $150,000 or less that generate less than

$100,000 in annual sales. See glossary.
Economic Research Service, USDA 17

Table 8–Production practices on 1996 ARMS corn farms, by farm typology

Small family farms Larger family farms

 Item

Part-time1 (a) Low sales (b) High sales(c) Large (d) Very large (e)

Seeding rate per acre (kernels) 27,395 b 25,845 acde 26,898 be 27,515 b 28,893 bcd

Row width (inches) 33.8 de 33.8 cde 32.7 bde 30.9 abc 30.4 abc

Fertilizer use (percentage of farms):

 Nitrogen 98 d 95 d 88 100 ab 98

 Phosphorous 89 bcde 82 a 72 a 80 a 74 a

 Potassium 93 b 87 a 78 91 86

 Manure 14 bce 31 ad 43 ade 21 bc 26 ac

Test nitrogen level (percentage of farms) 11 e *13 e *16 18 26 ab

 Use recommended level (percentage of farms) 77 70 56 *57 66

Fertilizer quantity on reporting farms:

 Nitrogen (lbs/acre) 129 e 123 e 125 131 e 158 abcd

 Phosphorous (lbs/acre) 69 71 69 e 68 e 88 cd

 Potassium (lbs/acre) 51 52 52 56 52

Chemical use (percentage of farms):

 Herbicides 89 90 cde 98 b 99 b 99 b

 Insecticides *14 e 22 cde 26 be 26 b 36 abc

Chemicals acre-treatments on reporting farms:

 Herbicides (acre-treatments) 2.5 2.7 2.7 2.8 2.8

 Insecticides (acre-treatments) 1.0 bd 1.1 a 1.1 1.3 a 1.3

Custom operations (percentage of farms):

 Any custom operation 52 47 e 48 50 61 b

 Preparation, cultivation, or planting *11 cd *6 *4 a #4 a #4

 Fertilizer/chemical 28 28 28 35 28

 Harvest 31 bde 17 ad *20 9 ab *15 a

 Drying 21 14 *12 13 *15

Total labor hours per acre 3.1 e 2.9 e 3.0 e 2.4 2.1 abc

 Unpaid 3.0 de 2.7 de 2.8 de 2.0 abc 1.5 abc

 Paid .1 de .1 de .2 de .4 abc .6 abc

Farms with paid labor (percent) *3 bde 10 ade 17 ade 39 abc 44 abc

Tillage systems (percentage of farms):

 Conventional 82 bcde 72 ac 55 ab 66 a 56 a

 Reduced 19 d 18 d 20 d 39 abc *26

 Conservation 18 bcde 28 ac 45 ab 34 a 44 a

 No-till *8 e 9 e 11 15 19 ab

Machinery:

 Planter width (rows) 4.8 cde 5.3 cde 6.6 abde 9.2 abce 10.1 abcd

 Harvester width (rows) 4.1 cde 4.1 cde 5.0 abde 5.7 abce 6.6 abcd

 Tractor horsepower (largest used) 109 cde 122 cde 150 abde 187 abce 207 abcd

 Speed of tillage/planting operations (acres/hr) 3.8 cde 5.4 cd 8.0 abd 9.9 abc 8.6 a

 Speed of harvest operations (acres/hr) 3.3 cde 3.1 cde 4.7 abe 5.3 ab 5.9 abc

 Total trips across field (number) 8.0 c 7.9 8.3 ae 8.0 7.6 c

 Tillage and planting trips (number) 4.0 de 3.9 de 3.7 de 3.2 abc 3.3 abc

Drying:

 Bushels dried (percentage) *30 bcde 49 acd 60 ab 65 ab 61 a

 Moisture removed (percentage points) *1.8 cde 2.8 cde 4.1 b 5.2 ab 5.0 ab

Coefficient of Variation = (Standard Error/Estimate)*100.

* indicates that CV is greater than 25 and less than or equal to 50.

# indicates that CV is greater than 50.

a, b, c, d, e indicates that estimates are significantly different from the indicated group at the 90 percent or better level using the t-statistic. 1 Part-time farms consist of retirement and residential/lifestyle farms plus farms with assets of $150,000 or less that generate less than

$100,000 in annual sales. See glossary.
18 Economic Research Service, USDA

Table 9–Characteristics of 1996 ARMS corn farms and corn producers, by farm typology

Small family farms Larger family farms

 Item

Part-time1

(a) Low sales (b) High sales (c) Large (d) Very large (e)

Corn acreage (percentage):

 Dryland 85 88 e 87 e 90 e 74 bcd

 Irrigated #15 *12 e *13 e *10 e 26 bcd

Production value:

 All commodities (dollars per farm) 50,459 bcde 101,267 acde 221,196 abde 431,549 abce 968,446 abcd

 Corn (dollars per farm) 21,223 bcde 36,804 acde 70,664 abde 177,381 abce 280,609 abcd

 Percentage of total production 39 36 d 32 d 41 bc 35

Corn acres harvested for grain (percent) 97 98 90 98 98

Corn acres harvested for silage (percent)D 1 9 2 2

Precision agriculture (percentage of farms):

 Variable rate tech./soil grid sampling #3 *5 de *6 de *20 bc *16 bc

 Harvested using yield monitor D de *3 de *5 de *17 abc 19 abc

Previous crop (percentage of farms)

 Soybean 42 d 38 d *30 de 65 abce 48 cd

 Corn 21 bce 33 ad 32 ad 22 bce 32 ad

 Other 36 d 29 d 38 17 abe 20

Commodities per farm (number) 2.4 bcde 2.9 acde 3.6 ab 3.5 ab 3.7 ab

Percentage of corn farms with:

 Corn under contract 15 bde 10 acde 26 be 39 ab 42 abc

 Cattle 44 c 57 cd 68 abde 44 bc 52 c

 Hogs *7 bcde 21 a *17 a 28 a *16 a

 Dairy *2 bcde 17 ac 32 abde 16 ac 14 ac

 Soybeans 51 de 50 de 63 de 48 abc 42 abc

 Hay 46 bc 65 ade 63 ade 48 bc 42 bc

 Wheat 17 de 25 e 28 e 33 a 44 abc

Operator occupation (percentage)

 Farming 0 bcde 100 a 100 a 100 a 100 a

 Non-farm 73 bcde 0 a 0 a 0 a 0 a

 Retired 37 bcde 0 a 0 a 0 a 0 a

Operator age (percentage):

 Less than 50 years 38 cd 37 cde 69 ab 65 ab 54 b

 50 to 64 years 36 32 27 29 41

 65 or more *26 cde 32 cde *4 ab *6 ab *5 ab

Operator education (percentage):

 High school or less 57 bd 71 ade *59 d 39 abc 43 b

 Some college 27 b 16 ade 28 39 b 36 b

 Completed college *16 12 d 13 21 b *20

Financial characteristics per farm:

 Net cash income (dollars) 7,567 bcde 14,570 acde 48,008 abde 88,595 abce 218,805 abcd

 Equity (dollars) 352,453 cde 387,405 cde 654,879 abde 947,963 abce 1,355,826 abcd

 Debt-to-asset ratio (percent) *11 de 12 de *14 20 ab 22 ab

 Rate of return on equity (percentage) *-5 cde -9 cde #0 abde *7 abce 17 abcd

 Government payments (dollars) 1,896 bcde 3,623 acde 6,315 abde 12,805 abce 22,756 abcd

 Corn crop insurance (percentage) 43 cde 52 cde 72 ab 75 ab 75 ab

D=Data insufficient for disclosure.

Coefficient of Variation = (Standard Error/Estimate)*100.

* indicates that CV is greater than 25 and less than or equal to 50.

# indicates that CV is greater than 50.

a, b, c, d, e indicates that estimates are significantly different from the indicated group at the 90 percent or better level using the t-statistic. 1 Part-time farms consist of retirement and residential/lifestyle farms plus farms with assets of $150,000 or less that generate less than

$100,000 in annual sales. See glossary.
Economic Research Service, USDA 19

Farm Characteristics and Operating Costs Related to Corn Acreage

Farms with large corn acreage have lower production costs per bushel, due largely to their higher yields,

than farms with small corn acreage.

Farms with the smallest corn acreage, those with

250 acres or less of corn, comprise 75 percent of

all U.S. corn farms and produce 29 percent of

U.S. corn output (table 10). While 90 percent or

more of the corn farms in Northern Crescent and

Southeast had less than 250 acres of corn in 1996

(fig. 5), nearly half of the farms with the smallest

corn acreage are located in the Heartland. At the

other extreme, fewer than 4 percent of corn farms

planted over 750 acres to corn, yet this 4 percent

produced just under 20 percent of U.S. corn. 

Farms with the largest corn acreage are mainly

located in the Heartland and Prairie Gateway. 

Farms with the largest corn acreage comprise

most of Prairie Gateway corn farms, while they

constitute a minority of Heartland corn farms.

Production costs per bushel in 1996 generally

declined as the corn acreage per farm increased

(table 10). Although farms with the smallest corn

acreage had the lowest average corn production

costs per acre, they had the highest average

production costs per bushel due to their low

yields in 1996. Had expected conditions

prevailed, it appears that production costs per

bushel would have been much the same for the

farms with less than 750 corn acres. However,

unit costs would have been significantly lower

for producers with 750 or more corn acres,

suggesting a cost advantage for these operators.
20 Economic Research Service, USDA

Farms with the smallest corn acreage differ from

the remaining corn farms in many ways, even

though their production cost per acre was nearly

the same as for farms with larger corn acreage. 

Those with the smallest corn acreage had the

lowest operating cost per acre due to their low

per acre costs for seed, fertilizer, and fuel. 

Fertilizer expenditures per acre were low since a

comparatively low percentage of these farmers

applied commercial fertilizers to their cornfields,

and those who did applied them at lower rates

(table 11). A higher percentage of farmers with

smallest corn acreage used manure in their

cornfields, likely reducing their commercial

fertilizer needs. Farmers with the smallest corn

acreage were more likely to have cattle or dairy

in their production mix, providing a source of

manure. Fuel expenditures were lower for

farmers with smallest corn acreage since they

were less likely to irrigate corn and usually

removed less moisture from corn during the

drying process. The capital costs of farm

machinery and equipment for farms with small

corn acreage were nearly equal to those with the

larger corn acreage, despite the relatively small

acreage over which they could spread their

capital costs.

Farms with 250 or more corn acres had different

production practices and tended to focus more on

corn production than farms with the smallest

corn acreage. Half or more of the total value of

farm production on farms with the larger corn

acreage is derived from corn (table 12). Farms

with 250 or more corn acres were more likely to

irrigate corn and to make heavier use of inputs

such as fertilizers, chemicals, and seed than

farms with the smallest corn acreage. Soybeans

were more likely to be used as a rotation crop

with corn on farms with the larger corn acreage. 

These farms were also more likely to use

conservation tillage, especially a no-till

production system, which may reduce the

number of trips that an operator makes across a

field. Operators of the farms with larger corn

acreage have larger machines and more powerful

tractors than operators with the smallest corn

acreage.

The characteristics of farms with larger corn

acreage mirror those found for larger family corn

farms under farm typology. Operators of the

farms with the larger corn acreage are generally

younger and better educated (table 12). They

have higher net cash incomes from farming and

they are more likely to have insured the corn

crop. Debt-to-asset ratios tend to be higher for

farms with larger corn acreage.
Economic Research Service, USDA 21

Table 10–Corn production costs and returns on 1996 ARMS corn farms, by corn-planted acreage

 Item Fewer than 250 (a) 250-499 (b) 500-749 (c) 750 or more (d)

Percentage of corn farms 75 bcd 14 acd 7 abd 4 abc

Percentage of corn acres 32 bcd 27 acd 23 abd 18 abc

Percentage of corn production (bushels) 29 bcd 27 ad 25 ad 19 abc

Size:

 Total operated acreage per farm 388 bcd 944 acd 1,409 abd 2,255 abc

 Planted corn acreage per farm 79 bcd 341 acd 578 abd 1,054 abc

Yield in bushels per acre:

 Actual 116 bcd 131 ac 143 ab 139 a

 Expected 126 bcd 136 ad 139 a 147 ab

Production costs per bushel (dollars):

 Actual 1.28 cd 1.22 1.18 a 1.14 a

 Expected 1.18 d 1.18 d 1.21 a 1.07 abc

Costs and returns per planted acre (dollars):

 Gross value of production 330.90 bcd 370.71 ac 406.54 ab 390.89 a

 Operating costs 149.75 bcd 163.02 a 170.49 a 162.67 a

 Seed 25.15 bcd 27.23 a 27.11 a 27.91 a

 Fertilizer 43.42 c 48.04 50.62 a 47.48

 Soil conditioners 0.30 bcd 0.12 ad 0.08 a 0.05 ab

 Manure 0.62 c *1.31 c #0.20 ab 0.00

 Chemicals 26.43 27.02 28.90 27.94

 Custom operations 13.19 bd 8.78 ac 13.80 b *8.47 a

 Fuel, lube, and electricity 20.35 bcd 26.10 a 27.19 a 25.77 a

 Repairs 15.20 16.97 15.89 14.96

 Purchased irrigation water D D 0.00 #1.43

 Interest on operating capital 3.64 bc 3.91 a 4.12 a 3.87

 Hired labor 1.44 bcd 3.40 a 2.59 a *4.78 a

 Ownership costs 69.86 74.89 d 68.50 65.00 b

 Capital recovery: machinery, equipment 62.50 b 68.20 acd 61.82 b 57.89 b

 Taxes and insurance 7.36 6.69 6.68 7.11

 Production costs 219.62 b 237.91 a 238.99 227.68

 Value of production less operating costs 181.14 bcd 207.70 ac 236.05 ab 228.22 a

 Value of production less production costs 111.28 bcd 132.81 acd 167.55 ab 163.22 ab

D=Data insufficient for disclosure.

Coefficient of Variation = (Standard Error/Estimate)*100.

* indicates that CV is greater than 25 and less than or equal to 50.

# indicates that CV is greater than 50.

a, b, c, d indicates that estimates are significantly different from the indicated group at the 90 percent or better level using the t-statistic
22 Economic Research Service, USDA

Table 11–Production practices on 1996 ARMS corn farms, by corn-planted acreage

 Item Fewer than 250 (a) 250-499 (b) 500-749 (c) 750 or more (d)

Seeding rate per acre (kernels) 26,332 bcd 27,539 a 27,575 a 28,283 a

Row width (inches) 33.4 bcd 32.1 a 31.5 a 30.2 a

Fertilizer use (percentage of farms):

 Nitrogen 93 bd 100 a 96 99 a

 Phosphorous 80 d 76 75 66 a

 Potassium 83 b 92 ac 84 b 89

 Manure 32 bcd 17 ad *10 a #5 ab

Test nitrogen level (percentage of farms) 11 bd 24 a *20 32 a

 Use recommended level (percentage of farms) 64 62 73 81

Fertilizer quantity on reporting farms:

 Nitrogen (lbs/acre) 114 bcd 130 acd 146 ab 152 ab

 Phosphorous (lbs/acre) 73 d 75 70 d 89 ac

 Potassium (lbs/acre) 54 51 55 54

Chemical use (percentage of farms):

 Herbicides 92 bc 99 a 98 a 97

 Insecticides 18 bcd 37 a 31 a 43 a

Chemical acre-treatments on reporting farms:

 Herbicides (acre-treatments) 2.6 c 2.7 2.8 a 2.8

 Insecticides (acre-treatments) 1.0 bd 1.2 a 1.1 1.3 a

Custom operations (percentage of farms):

 Any custom operation 49 d 57 59 61 a

 Preparation, cultivation, or planting 8 *5 D D

 Fertilizer/chemical 26 bc 42 a 43 a 33

 Harvest 24 bcd 8 a *11 a #6 a

 Drying 17 d 15 *22 d *8 ac

Total labor hours per acre 3.4 bcd 2.6 ad 2.3 ad 1.8 abc

 Unpaid 3.2 bcd 2.3 ad 2.0 ad 1.2 abc

 Paid .2 bcd .3 ad .4 a .6 ab

Farms with paid labor (percent) 10 bcd 37 a 29 ad 47 ac

Tillage systems (percentage of farms): 

 Conventional 70 c 65 57 a 60

 Reduced 16 bcd 30 a 37 a 36 a

 Conservation 30 c 35 43 a 40

 No-till 10 d 11 d 15 20 ab

Machinery:

 Planter width (rows) 5.4 bcd 8.1 acd 11.6 abd 12.3 abc

 Harvester width (rows) 4.2 bcd 5.7 acd 6.3 abd 7.3 abc

 Tractor horsepower (largest used) 122 bcd 175 acd 208 ab 227 ab

 Speed of tillage/planting operations (acres/hr) 5.0 bcd 7.9 acd 10.1 abd 13.3 abc

 Speed of harvest operations (acres/hr) 3.2 bcd 4.2 acd 5.7 abd 7.9 abc

 Total trips across field (number) 8.0 8.3 7.8 7.9

 Tillage and planting trips (number) 3.7 bcd 3.4 a 3.1 a 3.0 a

Drying:

 Bushels dried (percentage) 44 bcd 60 a 60 a 63 a

 Moisture removed (percentage points) 2.5 bcd 5.8 a 5.1 a 6.1 a

D=Data insufficient for disclosure.

Coefficient of Variation = (Standard Error/Estimate)*100.

* indicates that CV is greater than 25 and less than or equal to 50.

# indicates that CV is greater than 50.

a, b, c, d indicates that estimates are significantly different from the indicated group at the 90 percent or better level using the t-statistic.
Economic Research Service, USDA 23

Table 12–Characteristics of 1996 ARMS corn farms and corn producers, by corn-planted acreage

 Item Fewer than 250 (a) 250-499 (b) 500-749 (c) 750 or more (d)

Corn acreage (percentage):

 Dryland 96 bcd 86 ad 85 ad 71 abc

 Irrigated 4 bcd 14 ad 15 ad 29 abc

Production value:

 All commodities (dollars per farm) 127,344 bcd 326,987 acd 510,957 abd 910,781 abc

 Corn (dollars per farm) 27,451 bcd 130,795 acd 238,120 abd 453,403 abc

 Percentage of total production 31 bcd 48 acd 54 ab 59 ab

Corn acres harvested for grain (percentage) 91 98 d 99 99 b

Corn acres harvested for silage (percentage)8 1 1 D

Precision agriculture (percentage of farms):

 Variable rate technology/soil grid sampling 4 bcd *13 ad 20 a 28 ab

 Harvested using yield monitor *2 bcd 9 ad *18 ad 37 abc

Previous crop (percentage of farms):

 Soybean 38 bc 55 ac 71 abd 51 c

 Corn 27 c 30 c *16 abd 36 c

 Other 35 bcd 16 a 13 a 13 a

Commodities per farm 3.0 3.3 3.3 3.2

Percentage of corn farms with:

 Corn under contract 11 bcd 49 a 47 a 58 a

 Cattle 61 bcd 40 a *31 a 42 a

 Hogs 16 19 *26 *11

 Dairy 22 bcd *6 ac *2 ab *5 a

 Soybeans 50 bcd 87 a 89 a 78 a

 Hay 63 bcd 45 a *31 a 39 a

 Wheat 25 24 34 37

Operator occupation (percentage)

1

:

 Farming 70 bcd 97 a 96 a 98 a

 Non-farm 21 b #3 a D D

 Retired *8 cd D 0 a 0 a

Operator age (percentage):

 Less than 50 years 45 bc 67 ad 64 a 50 b

 50 to 64 32 25 34 38

 65 or more 23 bcd *7 a #2 abd *12 ac

Operator education (percentage):

 High school or less 65 bcd 49 ac 32 ab 40 a

 Some college 23 c 28 47 a 29

 Completed college 12 bd 23 a *21 30 a

Financial characteristics per farm:

 Net cash income (dollars) 25,314 bcd 58,435 acd 102,539 abd 215,559 abc

 Equity (dollars) 463,939 bcd 703,944 acd 1,070,900 abd 1,517,945 abc

 Debt-to-asset ratio (percent) 12 bcd 19 a 19 22 a

 Rate of return on equity (percentage) *-5 bcd #1 acd 11 ab *11 ab

 Government payments (dollars) 3,287 bcd 10,729 acd 15,553 abd 28,374 abc

 Corn crop insurance (percentage) 52 bcd 80 a 79 86 a

D=Data insufficient for disclosure.

Coefficient of Variation = (Standard Error/Estimate)*100.

* indicates that CV is greater than 25 and less than or equal to 50.

# indicates that CV is greater than 50.

a, b, c, d indicates that estimates are significantly different from the indicated group at the 90 percent or better level using the t-statistic. 1

May not add to 100 since percentages for hired managers are not shown.
24 Economic Research Service, USDA

Glossary

Agricultural Resource Management Study

(ARMS) is the source of data compiled for this

report. Corn cost and return estimates in this

report are derived from the responses of 1,379

corn farmers in 16 States to a survey on corn

production practices and costs as part of the 1996

ARMS. The target population for the corn survey

was farmers who planted corn with the intention

of harvesting the corn for grain. The National

Agricultural and Statistics Service (NASS) and

the Economic Research Service (ERS) collect

production and cost data once every 5-8 years for

each commodity on a rotating basis in the ARMS

survey. The survey data are weighted to

represent all U.S. corn acreage.

Cost categories

• Low-cost producers are the 25 percent of

U.S. corn producers with the lowest

production costs per harvested corn bushel. 

These corn producers had production costs

of $1.43 per bushel or less for corn. The

cost per bushel is computed by dividing

production costs by the bushels of corn

produced.

• High-cost producers are the 25 percent of

U.S. corn producers with the highest

production costs per harvested corn bushel. 

These corn producers had operating costs of

$2.50 or more per bushel.

Corn farms are farms that planted at least one

acre of corn in 1996 with the intent of harvesting

the corn for grain.

Corn production regions are based on ERS’s

farm resource regions (fig. 6). These consist of

county groupings with similar soils and climates

that favor production of selected crops and

livestock and lead to use of similar production

practices on farms within a region. The Southeast

region is the combination of the Eastern Uplands

and Southern Seaboard. No corn farms were

sampled in the Mississippi Portal or the Basin

and Range. 

Corn under contract is corn grown under a

marketing contract or corn grown under a formal

or informal arrangement to produce corn for

processors, packers, canners, and integrators.

Crop rotation refers to the crops planted in the

spring/summer of 1995 prior to the corn crop in

1996, described as follows:

• Soybeans are members of the legume

family. Legumes are plants with bacteria on

their nodules that take nitrogen from the air

and convert the nitrogen to a form usable by

plants.

• Corn is a member of the grass family. 

Grasses are plants that require nitrogen for

growth but cannot generate nitrogen. 

Therefore, farmers usually supply nitrogen to

grasses. 

• Other includes fields rotated with any other

crop other than soybeans or corn, as well as

land that was fallowed in the prior cropgrowing season or land taken out of the

Conservation Reserve Program during 1996.

Farm typology is a way to classify farms based

on the size of the farm operation, the operator’s

occupation, and farm asset levels. The size of

the farm operation is based on the annual value

of gross sales.

• Small farms are family farms with annual

gross sales of $250,000 or less. Family

farms exclude farms organized as nonfamily

corporations or cooperatives and exclude

farms operated by hired managers.

 Part-time farms are family farms that

generate annual gross sales of less than

$250,000 and whose operators report a

nonfarm occupation, as well as family

farms that generate annual sales totaling

less than $100,000 whose operators

report retirement as their occupation. 

All farms that generate less than

$100,000 in annual sales and have farm

assets valued under $150,000 are also

included in the part-time farm definition.
Economic Research Service, USDA 25

 Lower sales farms are family farms that

have annual gross sales of less than

$100,000 and farm assets of $150,000 or

more, and whose operators report farming

as their major occupation.

 High sales farms are those family farms

with annual gross sales of $100,000 or

more but less than $250,000, whose

operators report farming as their major

occupation.

• Larger farms are family farms with gross

annual sales of $250,000 or more.

 Large farm operations are defined as

farms with annual gross sales of $250,000

or more, but less than $500,000.

 Very large farms are those with annual

gross sales of $500,000 or more.

• Nonfamily farms are those organized as

nonfamily corporations or cooperatives or

those operated by hired managers. These

farms are excluded from the typology

discussion and tables, but are included in all

other tables and discussions.

Financial efficiency indicates how well a farm

operation is utilizing resources (Boehlje, 1984). 

There are several measures of financial

efficiency. One of the common ones is the ratio

of expenses to the gross value of production, or

its inverse. The ratio measures the amount of

expenditure to generate a dollar of output. 

Lower values for the ratio indicate a more

efficient use of resources than higher values.

Production costs are the sum of operating and

ownership costs for all participants in the corn

production enterprise, including the operators,

landlords, and contractors. Operating costs are

costs that vary with the amount of corn acreage
26 Economic Research Service, USDA

planted. These include the costs for seed,

fertilizer, soil conditioners, manure, chemicals,

custom operations, fuel, repairs, purchased

irrigation water, interest, and hired labor. 

Ownership costs are costs related to capital items

that are consumed during the year in the

production process. Ownership costs include the

capital recovery costs for farm machinery and

equipment, non-real estate property taxes, and

insurance. Capital recovery represents the value

of farm machinery and equipment consumed in

the annual production process. Capital recovery

costs are a discretionary expense in any given

year. In low-income years, the expenditures may

be deferred but ultimately they must be paid if a

producer is to maintain a viable farming

operation.

The production costs include the costs on

acreage that was planted with the intention of

harvesting grain. The per acre production costs

are divided by the bushels of corn produced. No

attempt is made to reduce costs for those farmers

who ultimately produced silage rather than corn.

Rate of return on farm equity represents the

return earned by the equity in a farm operation as

a percent of the value of farm equity. It is

computed by subtracting the return to operator

and unpaid labor and the return to management

from the net farm income earned by the farm

operation, dividing the total by the current value

of the equity in the farm business, and

multiplying by 100.

Tillage systems are defined by the amount of

crop residue remaining on the soil from the

previous crop.

• Conventional tillage leaves less than 30

percent of the previous crop residue covering

the soil when corn is planted.

 Reduced tillage leaves between 15

percent and 30 percent of the previous

crop residue covering the soil when corn

is planted.

• Conservation tillage leaves 30 percent or

more of the previous crop residue covering

the soil when corn is planted.

 No-till means that no tillage operations

have occurred prior to planting.
Economic Research Service, USDA 27

References

AAEA (American Agricultural Economics Association) (1998). Commodity Costs and Returns

Estimation Handbook. Ames, IA.

Boehlje, Michael, and Vernon R. Eidman (1984). Farm Management. New York: John Wiley & Sons,

Inc.

NCCES (North Carolina Cooperative Extension Service) (1995). Drought Advisory for Corn Production.

AG-519-13 (June).

Neild, Ralph E., and James E. Newman (1990). “Growing Season Characteristics and Requirements in the

Corn Belt,” in National Corn Handbook. NCH-40. Cooperative Extension Service, Purdue University.

Ohio State University Extension (1995). “Corn Production,” Bulletin 472, from Ohio Agronomy Guide,

13th edition.

Plumley, Garett O., and Robert H. Hornbaker (1991). “Financial Management Characteristics of

Successful Farm Firms,” Agricultural Finance Review, Vol. 51.

Purdy, Barry M., Michael R. Langemeier, and Allen M. Featherstone (July 1997). “Financial Performance,

Risk, and Specialization,” Journal of Agricultural and Applied Economics,

Vol. 29, No. 1.

Sonka, Steven T., and James N. Thorpe (Apr. 1991). “Income Performance and Managerial Characteristics

on Illinois Cash Grain Farms,” Journal of the American Society of Farm Managers and Rural Appraisers,

Vol. 55, No. 1.

Young, C. Edward, and Paul C. Westcott (Aug. 1996). The 1996 U.S. Farm Act Increases Market

Orientation. AIB-726. Econ. Res. Serv., U.S. Dept. of Agr.

U.S. Department of Agriculture, National Agricultural Statistics Service (NASS). Published Estimates

Data Base, http://www.nass.usda.gov:81/ipedb/.
28 Economic Research Service, USDA

National Agricultural Library Cataloging Record:

Foreman, Linda F.

Characteristics and production costs of U.S. corn farms.

(Statistical bulletin (United States. Dept. of Agriculture) ; no. 974)

1. Corn--Economic aspects--United States. 2. Corn industry--United

States--Costs.

3. Agricultural price supports--United States. 4. Agricultural

subsidies--United States.

I. Title.

HD9049.C8