Gary Vocke and Mir Ali

Economic

Research

Service

Economic 

Information

Bulletin

Number 116

August 2013

United States Department of Agriculture

U.S. Wheat Production Practices, 

Costs, and Yields: Variations 

Across Regions
Economic Research Service 

www.ers.usda.gov

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Vocke, Gary, and Mir Ali. U.S. Wheat Production Practices, Costs, and Yields: Variations 

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United States Department of Agriculture

Economic 

Research 

Service

Economic

Information

Bulletin

Number 116

August 2013

Abstract

USDA’s 2009 Agricultural Resource Management Survey (ARMS) provides the most 

recent data on U.S. wheat production costs. The wide variation in wheat production costs 

across the United States captured by the survey reflects the differences in cropping practices, yields, and costs of land, labor, and capital assets. The North Central and Northern 

Plains regions have the lowest and highest per bushel costs, respectively. The two cost 

items that accounted for much of the regional differences in total production costs were 

machinery and fertilizer. The survey found that 97 percent of the country’s farms could 

have covered all their operating costs with the 2009/10 season average price of $4.87 per 

bushel if they had been able to attain the yields they expected at planting (as reported 

in the survey). However, only 79 percent would have been able to cover their operating 

costs with the yields they actually harvested. The relatively high percentage of farmers 

who were apparently not covering these costs is attributed, in part, to a large number of 

farmers in the Southern Plains whose crops were adversely affected by severe weather.

Keywords: wheat, prices, inputs, cost of production, Agricultural Resource Management 

Survey, ARMS, operating costs, ownership costs 

Acknowledgments

The authors would like to thank Erik Dohlman, Mark Jekanowski, Daniel Pick, and Paul 

Westcott of the Market and Trade Economics Division, Economic Research Service, 

USDA and several anonymous reviewers for their comments. The authors would also like 

to thank Courtney Knauth and Cynthia A. Ray for editorial and design assistance.

Gary Vocke and Mir Ali 

U.S. Wheat Production Practices, 

Costs, and Yields: Variations 

Across Regions
ii

U.S. Wheat Production Practices, Costs, and Yields: Variations Across Regions, EIB-116

Economic Research Service/USDA

Contents

Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Trends in the U.S. Wheat Sector: Effects on Planted Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Policy Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Changes in Production Practices and Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Wheat Disease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Geographic and Climatic Patterns of U.S. Wheat Production. . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Winter Versus Spring Wheat. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Effects of Climate on Wheat Production Practices and Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Nitrogen Fertilizer Requirements Vary by Class of Wheat. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

The Risk of Adverse Weather in Any One Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Price Trends for Wheat and Production Inputs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Wheat Prices, 1996-2011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Input Costs, 1996-2011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

The 2009 Agricultural Resource Management Survey of the U.S. Wheat Sector. . . . . . . . . . 13

National Overview of Production Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Regional Variation in Production Costs for Expected Yields. . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Impacts of Adverse Weather in the Southern Plains, 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
www.ers.usda.gov

What Is the Issue?

Wheat, produced in nearly every part of the United States, is the third largest U.S. crop in terms 

of both value and acreage, behind corn and soybeans. Unlike most other crops, however, wheat 

has distinct varieties that are produced in different regions or over different seasons. The result is 

wide variation in the costs of wheat production across growing areas, inherent in the diversity of 

inputs and production practices. These costs can affect the competitiveness of wheat with other 

crops in each region and the profitability of planting wheat. This study explores the variation in 

wheat production costs across U.S. regions, based on data from the 2009 Agricultural Resource 

Management Survey (ARMS). 

What Did the Study Find?

The wide variation of wheat production costs across the country reflected differences in yields, 

cropping practices, and costs of land, labor, and capital assets. Regional climatic differences 

across the United States accounted for much of the variation in the class of wheat grown, each 

with its own production practices and associated costs. Northern wheat producers, for example, 

chose spring wheat varieties that were harvested in the fall because winter wheat—planted in 

the fall for summer harvest—would be killed by the cold during its winter dormancy. Growers 

in areas with abundant rainfall were able to boost their yield potential by applying high rates of 

fertilizer. At the other extreme, some regions had areas so dry that costly irrigation was needed to 

produce a wheat crop.

Wheat Yields and Production Costs: Expected Versus Actual

National Overview

In 2009, the expected national average of combined operating and ownership costs was $4.00 per 

bushel of wheat versus an actual average of $4.75. The expected average U.S. yield was 47.7 bushels 

per acre, while the actual average yield was 40.2 bushels. The 2009 season average price (SAP, estimated annually by the USDA National Agricultural Statistics Service) was $4.87 per bushel.

An analysis using expected yields (based on survey responses) and the 2009 SAP finds that 97 

percent of U.S. farms would have covered their operating costs if they had met their expected 

yields and received the SAP of $4.87 per bushel, 77 percent would have covered both operating 

and ownership costs, and 34 percent would have covered their total costs. 

Fewer U.S. farmers covered their operating costs when the analysis considers actual or realized 

yields. If farmers, on average, had received the $4.87 SAP for the bushels they harvested in 2009, 

79 percent of them would have covered their operating costs, 53 percent would have covered their 

United States Department of Agriculture

A report summary from the Economic Research Service August 2013

ERS is a primary source 

of economic research and 

analysis from the U.S. 

Department of Agriculture, 

providing timely information on economic and policy 

issues related to agriculture, 

food, the environment,and 

rural America.

Find the full report 

at www.ers.usda.

gov/publications/eibeconomic-informationbulletin/eib-116.aspx

Gary Vocke and Mir Ali

Economic

Research

Service

Economic 

Information

Bulletin

Number 116

August 2013

United States Department of Agriculture

U.S. Wheat Production Practices, 

Costs, and Yields: Variations 

Across Regions

Gary Vocke and Mir Ali

U.S. Wheat Production Practices, Costs, 

and Yields: Variations Across Regions
operating and ownership costs, and 18 percent would have covered their total costs. Actual yields and costs are 

typically lower than expected ones, but this may have been especially evident in 2009 because of adverse weather. 

In particular, an April freeze and severe drought in the Southern Plains region led to the abandonment of many 

wheat fields and sharply reduced output, resulting in high production costs per bushel for the region. Local statistics such as these are reflected, in turn, in national average yields and costs.

Regional Comparisons

In all five regions analyzed, the average yield of bushels per acre was fewer than expected and average production 

costs were higher. The discrepancies and the factors underlying them varied by region.

North Central – Although the region’s actual yield of 59.8 bushels per acre was well above the national average 

and the highest among the regions, it fell short of the expected 69.2 bushels. North Central had the lowest overall 

production costs among regions but the highest operating costs, driven by large input expenditures. Farmers in the 

region applied the most fertilizer, which acted in combination with the region’s generous rainfall to promote high 

yields. Overall production costs were low because the high yields spread ownership costs over many harvested 

bushels of wheat. 

Southern Plains – The region had the largest discrepancies between expected and actual production costs ($3.80 

versus $8.76) and yields per acre (37.5 bushels expected versus 16.3 realized). As noted, the Southern Plains were hit 

by a double weather disaster in 2009, an April freeze and severe drought, which sharply reduced the wheat harvest. 

Central Plains – The actual yield of the Central Plains—43.2 bushels per acre—was close to the expected yield 

of 47.6 bushels and to the national average, although actual production costs of $4.39 per bushel exceeded the 

$3.98 expectation. In 2009, the region’s yield was almost three times higher than in the neighboring Southern 

Plains because of the freeze and drought in the south. Central Plains wheat yields are higher than Southern Plains 

yields even in a year of more normal weather because temperatures are not as high on the Central Plains and the 

risk of drought is less. 

Northern Plains – The Northern Plains had the highest expected production cost per bushel among the regions. 

Three-fourths of producers grew lower yielding spring wheat varieties. The region had relatively high expenses for 

fertilizer, as well as for herbicides and fungicides. The harvested yield (43.7 bushels) came close to the projected 

yield (45.5 bushels).

Northwest – Although the Northwest region’s actual yield of 59.5 bushels per acre fell short of its 67.0-bushel 

expectation, it was nearly tied with North Central for the highest yield, despite having lower rainfall. The 

Northwest’s expected yields are high, in part, because it has the most irrigation, covering more than 20 percent 

of wheat acreage. With its relatively high yields, its actual production costs of $4.42 per bushel were below the 

national average despite the irrigation expense. About half the crop is soft wheat, which is given only low applications of nitrogen fertilizer to ensure the low protein levels for which it is grown. 

How Was the Study Conducted?

The farm-level data for this paper were derived from USDA’s annual Agricultural Resource Management Survey 

(ARMS) for 2009. The ARMS, based on a representative sampling of all U.S. farms, provides information on 

a broad range of issues about agricultural resource use, production practices, farm costs, and financial conditions and economic well-being of America’s farm households. The ARMS collects data every 4-8 years for each 

commodity. The authors based their annual production cost estimates on data from the 2009 survey of the U.S. 

wheat sector. They arranged these estimates from the lowest production costs to the highest to form cumulative 

distributions. Two sets of cumulative farm distributions were calculated, one using expected yields and the other 

using actual yields. To provide some explanation for the discrepancies between expected and realized output and 

prices, the authors supplemented their regional data analyses with expert knowledge of regional conditions and 

wheat production practices. 

www.ers.usda.gov
1

U.S. Wheat Production Practices, Costs, and Yields: Variations Across Regions, EIB-116

Economic Research Service/USDA

U.S. Wheat Production Practices, Costs, 

and Yields: Variations Across Regions

Gary Vocke and Mir Ali 

Introduction

This analysis of costs and returns for U.S. wheat producers is based on data collected in the winter 

of 2009-10 in USDA’s Agricultural Resource Management Survey (ARMS) of wheat farms, which 

included production costs for the wheat crop harvested in 2009. 

The analysis of survey data uses both expected, or normal, yields and realized, or actual, yields. 

Expected yields reflect long-term trends based on normal conditions and are the yields that farmers 

use in planning input use, such as the quantity of fertilizer to apply. Realized yields are the crops 

that were actually harvested. This yield distinction is important because in 2009 an April freeze 

and a severe drought affected wheat production in the Southern Plains, especially in Texas. Yields 

were sharply reduced and in many cases were so low that fields were not harvested. These losses, 

due to both lower yields and abandoned acres, resulted in very high per bushel costs for the wheat 

harvested in the Southern Plains. 
2

U.S. Wheat Production Practices, Costs, and Yields: Variations Across Regions, EIB-116

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Trends in the U.S. Wheat Sector: Effects on Planted Area

Despite a decrease in wheat acreage, the United States is still a major wheat-producing country, 

with output exceeded only by China, the European Union (EU-27), and India. In the United States, 

wheat ranks third among field crops in both planted acreage and value of production, behind corn 

and soybeans. U.S. wheat area has varied widely during the past half-century, peaking in the early 

1980s. Several factors have influenced the downward trend in wheat planting.

Policy Changes

Wheat area dropped off in the mid-1980s, primarily due to large Acreage Reduction Program (ARP) 

levels implemented when Government-owned stocks were very large (fig. 1).

1 Wheat planting recovered in the late 1980s through mid-1990s as stocks declined and prices rose. The 1996 Farm Act 

eliminated ARP and introduced full planting flexibility, enabling farmers to switch to alternative 

crops without penalties. Planting flexibility increased competition for area among corn, oilseeds, 

and wheat, putting downward pressure on wheat planting, which was less profitable than planting 

other crops. Enrollment in the Conservation Reserve Program (CRP), which encourages farmers to 

convert highly erodible cropland to environmentally beneficial uses, is concentrated in regions where 

wheat production predominates.

1See the ERS Farm & Commodity Policy Glossary at http://www.ers.usda.gov/topics/farm-economy/farm-commoditypolicy/glossary.aspx for background information on the ARP and the CRP.

Figure 1

U.S. wheat area and yield 

Source: USDA National Agricultural Statistics Service. Quick Stats. 

Million acres

-5

5

15

25

35

45

55

0

20

40

60

80

100

120

1980/81 1990/91 2000/01 2010/11

Market year

Planted (historical)

Harvested (historical) Yield (right axis)

Bushels/acre
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U.S. Wheat Production Practices, Costs, and Yields: Variations Across Regions, EIB-116

Economic Research Service/USDA

Changes in Production Practices and Technology

Wheat land has been switched to other uses as a result of changing technologies. For example, in 

western Kansas, the historical wheat/fallow rotation has commonly been replaced by a rotation of 

wheat/grain sorghum/fallow in which wheat is planted 1 year out of 3 instead of every other year. 

The increased use of water-conserving reduced-till and no-till farming has facilitated the planting of 

crops such as corn and soybeans, resulting in higher yields and profitability of these crops. 

Wheat acreage on the Plains has been further lost to corn and soybeans because of genetic modifications in those crops. New varieties of corn and soybeans can be planted farther west and north 

in areas with drier conditions or shorter growing seasons. Further, weed control is far easier with 

herbicide-resistant varieties of corn and soybeans. The pace of genetic modification has been slower 

for wheat, resulting in little growth in wheat yields, which can make wheat a less attractive cropping 

option for farmers (fig. 2).

The trend of planting corn and soybeans on acreage traditionally planted to wheat can be illustrated by data for Kansas and North Dakota, two of the country’s largest wheat-producing States. In 

the early 1980s, wheat accounted for 80-90 percent of the total area of wheat, corn, and soybeans 

planted in Kansas and North Dakota. In recent years, wheat’s share has dropped to 50-52 percent of 

the total (fig. 3).

Wheat Disease 

Concerns about wheat disease in the Northern Plains, particularly scab (head blight) in North 

Dakota and Minnesota, have influenced planting decisions since the 1990s. The increased incidence 

of this disease may stem in part from larger corn plantings and reduced tillage in traditional wheat 

areas in the Northern Plains, practices that support hosts for disease organisms.

Figure 2

Indices of North Dakota crop yields (3-year averages)

Source: ERS calculations using data from USDA, National Agricultural Statistics Service, Quick Stats.

Index 1976 = 1

0.5

1.0

1.5

2.0

2.5

1976 79 82 85 88 91 94 97 2000 03 06 09

Calendar year

Corn

Soybeans

Wheat
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U.S. Wheat Production Practices, Costs, and Yields: Variations Across Regions, EIB-116

Economic Research Service/USDA

Figure 3

Wheat plantings as share of planted area of wheat, corn, and soybeans in Kansas 

and North Dakota

Source: ERS calculations using data from USDA, National Agricultural Statistics Service, Quick Stats.

Percent

45

55

65

75

85

95

1980 83 86 89 92 95 98 2001 04 07 10

Calendar year

North Dakota

Kansas
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U.S. Wheat Production Practices, Costs, and Yields: Variations Across Regions, EIB-116

Economic Research Service/USDA

Geographic and Climatic Patterns of U.S. Wheat 

Production 

The interaction of climate with wheat classes results in regional differences in wheat production 

practices in the United States. These differences provide insight into regional variations in production costs per acre and per bushel. 

Winter Versus Spring Wheat

Wheat varieties grown in the United States are classified as “winter wheat” or “spring wheat,” 

depending on the season in which they are planted. Wintertime temperature lows are a key determinant of whether winter or spring wheat is grown in a particular location. Winter wheat varieties 

are sown in the fall and usually become established before going into dormancy when winter cold 

arrives. The following spring, winter wheat plants resume growth until summertime harvest (fig. 

4). Winter wheat represents 70-80 percent of total U.S. wheat production. Winter wheat has a 

higher yield potential than spring because of its longer growing season. Spring wheat is planted in 

the spring and harvested in late summer or fall of the same year (fig. 5). It is grown largely in the 

Northern Plains, where cold wintertime temperatures would kill winter wheat in dormancy. 

Effects of Climate on Wheat Production Practices and Yields 

In the Plains, wheat yield potential is lower than in the eastern half of the United States, not just 

because the Plains cultivate lower yielding spring wheat, but also because the area has less than 

optimal moisture and higher growing-season temperatures. Extreme heat causes wheat crops to 

mature faster, reducing yield potential. The stress of high temperatures and/or lack of moisture 

Figure 4

U.S. winter wheat areas

Yellow numbers indicate the percent each State contributed to the 

total national production of wheat. States not numbered contributed 

less than 1% to the national total.

• Major areas combined account for approximately 

75% of the total national production. 

• Major and minor areas combined account for approximately 99% of 

the total national production.

• Major and minor areas and State production percentages are derived 

from NASS county- and State-level production data from 2006-2010. 

Note: The agricultural data used to create the map and 

crop calendar were obtained from the National Agricultural 

Statistics Service at: http://www.nass.usda.gov/

Crop calendar dates are based upon NASS crop progress data from 2006-2010. The 

field activities and crop development states illustrated in the crop calendar represent 

the average time period when national progress advanced from 10 to 90 percent.

Source: USDA, World Agricultural Outlook Board, Agricultural Weather Assessments.

Winter wheat crop calendar for most of the United States
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U.S. Wheat Production Practices, Costs, and Yields: Variations Across Regions, EIB-116

Economic Research Service/USDA

results in smaller wheat kernels with a higher protein content than would occur with more favorable 

weather. Dryland farmers in the Pacific Northwest obtain higher yields than farmers in the Central 

and Southern Plains, in part because of the Northwest’s cooler summertime temperatures. For 

optimum wheat growth and yield, milder temperatures are better. 

Figure 5

U.S. spring wheat areas

Major crop area

Minor crop area

Yellow numbers indicate the percent each State contributed to 

the total national production. States not numbered contributed 

less than 1% to the national total.

• Major areas combined account for approximately 

75% of the total national production. 

• Major and minor areas combined account for approximately 99% of 

the total national production.

• Major and minor areas and State production percentages are derived 

from NASS county- and State-level production data from 2006-2010. 

Note: The agricultural data used to create the map and 

crop calendar were obtained from the National Agricultural 

Statistics Service at: http://www.nass.usda.gov/

Source: USDA, World Agricultural Outlook Board, Agricultural Weather Assessments.

Crop calendar dates are based upon NASS crop progress data from 2006-2010. The 

field activities and crop development states illustrated in the crop calendar represent 

the average time period when national progress advanced from 10 to 90 percent.

Spring wheat crop calendar for most of the United States

Figure 6

U.S. rainfall distribution

Source: USDA, World Agricultural Outlook Board, Agricultural Weather Assessments.
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Rainfall has a considerable impact on potential yields and production practices. In the eastern half 

of the country, rainfall is typically more than adequate to produce a wheat crop. With this relatively high rainfall comes a higher yield potential than in the Plains, provided adequate fertilizer is 

applied. In some arid areas in the West, rainfall is inadequate to produce a crop, necessitating irrigation if wheat is to be grown. Though costly, irrigation, along with adequate fertilizer application, 

sharply increases yields. 

Table 1 presents the highest 

yields achieved over the past 5 

years for selected States. These 

data provide an indication of 

the yield potential under favorable weather conditions. Yields 

are higher in the more humid 

Midwest than in the semiarid 

West. In States where both 

winter and spring wheat are 

grown, winter wheat has the 

higher yield.

Higher yields generally mean 

that machinery expenses can 

be spread over more bushels, 

reducing machinery costs per 

bushel. Machinery expenses are 

a key variable in regional differences in per bushel production 

costs. Fertilizer expenses are 

another key variable: farmers in 

the eastern half of the country 

use more fertilizer than Plains 

farmers and realize higher 

yields. Conversely, yield potential is less in the Plains, so fertilizer requirements are lower.

Nitrogen Fertilizer Requirements Vary by Class of Wheat

Five principal classes of wheat are grown in the United States (see box, “U.S. Wheat Classes”). The 

key difference among them for this discussion is protein content. Hard red winter (HRW), hard red 

spring (HRS), and durum wheat are used to make products that require high-protein flour. Soft red 

winter and soft white wheat are used to make products that require low-protein flour.

These flour-protein requirements have implications for wheat producers, as protein production 

in wheat requires nitrogen. Producers of HRW, HRS, and durum wheat must make sure to apply 

enough nitrogen fertilizer to produce grain with adequate protein content for the products made from 

these wheat classes. Soft-wheat producers have the opposite concern; they need to limit nitrogen 

fertilizer applications to ensure a low-protein crop. This is particularly true for soft white wheat 

produced for export to Asia. In the Pacific Northwest, where both soft white spring and HRS wheat 

Table 1

Highest wheat yields from 2007 to 2011 for selected States1

Winter wheat yields Spring wheat yields

bu/acre bu/acre

Midwest States

Illinois 67

Michigan 75

Missouri 61

Ohio 72

Plains States

Colorado 45

Kansas 48

Montana 48 38

Nebraska 48

North Dakota 46

Oklahoma 39

South Dakota 55 45

Texas 37

Pacific Northwest States

Idaho 91 84

Oregon 77

Washington 75 62

1Includes both irrigated and nonirrigated acres.

bu. = bushel.

Source: USDA, National Agricultural Statistics Service, Quick Stats.
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are produced, the nitrogen fertilizer application will be about 40 percent higher for the HRS crop to 

attain the same yield (Mahler and Guy, 2007).

In addition, in areas of the Pacific Northwest where both HRW and HRS wheat are grown, nitrogen 

fertilizer application rates are more than 20 percent higher for HRS to get the same yield as HRW 

because of the shorter growing season for HRS (Stark, Mahler, and Tindall, 2004). During the 

growing season, microorganisms convert organic sources of nitrogen to inorganic nitrogen that can 

be utilized by the wheat plant. With spring wheat’s shorter growing season, there is less total organic 

matter conversion to inorganic nitrogen. To compensate for the reduced conversion, a higher nitrogen 

fertilizer application rate must be used for spring wheat.

The Risk of Adverse Weather in Any One Year

Detrimental weather conditions, such as low rainfall or a late-spring freeze, can reduce wheat yields 

and raise realized per bushel production costs above expected levels. In extreme cases, yield potential may be reduced so much that it is not economical to harvest the crop. Weather risk is perhaps 

highest in the Southern Plains because of the frequency of drought. 

U.S. Wheat Classes

Wheat is the principal food grain produced in the United States. Production of wheat classes tends 

to be region-specific (see National Association of Wheat Growers, 2012). The terms “hard” and 

“soft” refer to the texture of the starchy endosperm of the wheat kernel that is ground to produce 

wheat flour. Each class has a somewhat different end use. The five major classes of U.S. wheat are:

• Hard red winter (HRW) wheat accounts for about 40 percent of total production and is 

grown primarily in the Great Plains (Texas north through Montana). HRW is a high-protein 

wheat that is principally used to make bread flour.

• Hard red spring (HRS) wheat accounts for about 25 percent of production and grown 

primarily in the Northern Plains (North Dakota, Montana, Minnesota, and South Dakota). 

HRS wheat is valued for high protein levels that make it suitable for specialty breads, pasta, 

and blending with lower protein HRW wheat for loaf bread.

• Soft red winter (SRW) wheat accounts for 15 to 20 percent of total production, is grown 

primarily in States along the Mississippi River and in the eastern States. SRW flour is used 

for cakes, cookies, crackers, and other wheat products made from low-protein flour.

• Soft white wheat, which accounts for 10 to 15 percent of total production, is grown in 

Washington, Oregon, Idaho, Michigan, and New York. Its flour is used for cakes, cookies, 

crackers, and other wheat products made from low-protein flour.

• Durum wheat, accounting for 3 to 5 percent of total production, is grown primarily in North 

Dakota and Montana and is used to produce pasta.

These different classes of wheat are used to make different products, based in part on their protein 

content. The protein in wheat flour turns into gluten when the flour is made into dough, and the 

proteins absorb water and are pulled and stretched in the kneading process. As the proteins are 

worked, they become long, flexible strands. The yeast added to the dough produces gases, mostly 

carbon dioxide, which is trapped by these strands, causing the dough to expand or rise. Leavened 

bread products require more flour than products like cookies and crackers.
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Economic Research Service/USDA

Figures 7 and 8 show that wheat yields and harvest-to-planted ratios in the Southern Plains States of 

Texas and Oklahoma are lower and more variable than in the rest of the country. The rate of abandonment is typically higher in these States than elsewhere in the country because part of the crop 

is used as pasture when grazing is more profitable than harvesting the grain. The use as pasture 

increases as adverse weather reduces wheat yields. The graphs also show the impact of adverse 

weather on yields and rates of acreage abandonment in Texas and Oklahoma in 2009, the year of 

the ARMS used in this study. Wheat producers in these two Southern Plains States were severely 

impacted in 2009 by a spring freeze and drought.

Figure 7

Wheat yields for Texas and Oklahoma and the rest of the United States

Source: USDA, Economic Research Service.

Yield, bushel/acre

1980 83 86 89 92 95 98 2001 04 07 10

10

20

30

40

50

60

Rest of the United States

Texas and Oklahoma

Source: USDA, Economic Research Service.

Figure 8

Wheat harvest-to-planted ratios for Texas and Oklahoma and the rest of the United States

Ratio

1980 83 86 89 92 95 98 2001 04 07 10

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Rest of the United States

Texas and Oklahoma
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Price Trends for Wheat and Production Inputs

This analysis of costs and returns for U.S. wheat producers is based on ARMS data collected in the 

winter of 2009/10 on the production costs for the wheat crop harvested in 2009. For context, price 

trends for wheat and production inputs from 1996 to 2011 are shown in figures 9 and 10.

Wheat Prices, 1996-2011 

Monthly prices for the 2009/10 wheat marketing year (June 2009-May 2010) resulted in a national 

season-average price (SAP) of $4.87 per bushel. This price is below the record $6.78 per bushel 

set in 2008/09, but high by historical standards; the 10-year average SAP before the price increase 

in 2007 and 2008 was $3.20 per bushel. Global production expanded sharply in response to the 

2008/09 price spike and received a boost from more favorable weather, reducing the world’s demand 

for U.S. wheat. As a result, U.S. wheat exports declined, ending stocks rose, and prices fell in 

2009/10. (See box, “U.S. Wheat Prices in 2009,” for details about prices received by farmers. For 

more details about this marketing year, see Vocke, 2010).

Input Costs, 1996-2011

Rapidly falling input prices partially offset the sharp decline in wheat prices from 2008/09 to 

2009/10 (fig. 10). Fertilizer and fuel costs, accounting for between 25 and 50 percent of operating 

and ownership costs in the regions used in this analysis, have been particularly volatile, spiking in 

2008 before declining to lows in 2009 and 2010. The decline was due in part to falling energy prices 

as the global financial crisis began in late 2007. As global economic growth resumed, energy prices 

began to rise again, increasing both fuel and fertilizer prices for farmers.

Figure 9

Average monthly wheat prices received by farmers, June 1996-December 2011

Source: USDA, National Agricultural Statistics Service, Quick Stats.

Dollars/bushel

0

2

4

6

8

10

12

1996 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11

6%
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Energy prices are related to fertilizer prices, both directly through the price for the natural gas 

used to produce ammonia and indirectly through transportation costs. Ammonia is the main source 

of nitrogen in various fertilizers, so a change in the price of ammonia often affects the price of all 

nitrogen-compound fertilizers. Fertilizer prices are also affected by the rapidly rising demand for 

fertilizer in developing countries like China, India, and Brazil. Finally, the fall in the value of the 

U.S. Wheat Prices in 2009

Prices received by individual farmers can vary because of wheat class differences, distance from 

principal markets, quality premiums or discounts, cash spot prices or forward contract prices, and 

the date marketed. 

The timing of wheat sales is important because of price variability during the marketing year. 

Average all-wheat monthly prices for 2009/10 began with $5.72 per bushel in June 2009. The 

monthly price dropped to a fall low of $4.47 in October and rose to a winter high of $4.90 

in January 2010 before dropping to a May low of $4.33. Each marketing year has a unique 

seasonal pattern that is often difficult to forecast, making the timing of sales to get the highest 

price problematic.

The price spreads between the wheat classes vary year to year. The Season-Average Price 

(SAPs) for the five classes of wheat for 2009/10 were: hard red winter, $4.84; hard red spring, 

$5.26; soft red winter, $4.35; white, $4.52; and durum, $5.47. The principal growing areas of 

each class of wheat are discussed in box 1, “U.S. Wheat Classes.” Most of the regions in this 

report have more than one class of wheat, making comparison of regional cost with the SAP of 

an individual class SAP invalid. The focus of the regional analysis is on the differences in input 

use that lead to production cost differences.

Source: USDA, National Agricultural Statistics Service, Quick Stats.

Figure 10

Prices-paid index for selected farm inputs 

Index 1990-92 = 100

50

100

150

200

250

300

350

400

450

Fertilizer

Fuels

Farm machinery

Ag chemicals

1996 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11
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U.S. dollar in recent years has raised the price of imported energy and fertilizer for U.S. farmers. 

Machinery prices, which range from 25 to 40 percent of operating/ownership costs, have shown 

strong annual growth in recent years. The price of agricultural chemicals has increased, but at a 

much slower pace than the other input prices.
13

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The 2009 Agricultural Resource Management Survey of 

the U.S. Wheat Sector

This section uses the concepts of operating, ownership, and opportunity costs (see box, “Enterprise 

Costs of Production”) to analyze the regional variability of the cost of growing wheat in the United 

States. The analysis includes both expected and realized yields. Farmers use expected yields in planning input use, for example, the quantity of fertilizer to apply. Realized yields can be higher or lower 

than expected if, for example, the weather was better or worse than predicted. 

USDA’s 2009 ARMS provides the most recent data on U.S. wheat production costs.2 The wide variation of wheat production costs across the country captured by the survey reflects the differences in 

cropping practices and yields, as well as cost differences in land, labor, and capital assets. The 2009 

ARMS data also capture the effects of adverse weather events on realized wheat yields in the Southern 

Plains, along with their consequent effects on harvested acres and per bushel costs in the region.

2Seventeen wheat-producing States were included in the survey. Respondents to the 2009 ARMS of wheat used in this 

analysis (2,330 farms) represented 140,694 farms, or 49.9 million acres of the 59.1 million acres planted in 2009. 

Enterprise Costs of Production

Enterprise costs are the value of resources used in the production of wheat, classified into three 

categories for this analysis:

Operating costs are the short-run costs incurred in planting, growing, and harvesting the wheat 

crop. They include items such as seed, fertilizer, and chemicals, custom operations, fuel, electricity, purchased water, baling straw, and hired labor. The farmer expects that the returns from 

the crop will at least cover these expenses, or else it would not be worthwhile to plant the crop.

Ownership costs include repairs, the annualized cost of maintaining the capital investment 

(depreciation and interest) in farm machinery, equipment, and facilities, and property taxes 

and insurance. Ownership costs do not need to be covered in one crop cycle but will have to be 

covered in the medium-term for the farm to remain profitable.

Opportunity costs reflect the loss of potential gains from alternative opportunities when 

one alternative is chosen. They can include unpaid labor for the time spent by a farmer in the 

production of a commodity, the rental rate of the land (should the farmer have chosen to rent 

the land to another producer), and the enterprise share of general farm overhead. General farm 

overhead includes the expenses for items such as farm supplies, marketing containers, hand 

tools, power equipment, maintenance and repair of farm buildings, farm utilities, and general 

business expenses that cannot be directly attributed to a single farm enterprise. Costs of general 

farm overhead items are allocated to each commodity produced on the farm based on its relative 

contribution to total farm operating margin (i.e., value of production less operating costs). In the 

long run, if the opportunity cost for these resources, such as labor and land, is not covered, then 

those resources will be moved to other activities that provide a higher return.
14

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National Overview of Production Costs 

The variation in producer costs across the United States can be shown by arranging wheat farms or 

production from the lowest to the highest cost to form cumulative distributions of farms or production.3 Figures 11a and 11b have cumulative distributions based on farms, with fi gure 11a using 

expected yields and fi gure 11b using realized yields. Figure 12a and fi gure 12b have distributions 

based on production, with fi gure 12a using expected yields and fi gure 12b using realized yields. The 

steeper slopes of the distribution lines in the “b” graphs indicate that realized yields were smaller 

than expected yields, meaning that fewer farmers were able to cover their costs.

The cumulative distributions are evaluated using the national SAP for wheat of $4.87 per bushel 

for the 2009/10 marketing year. The national SAP is used for the comparison with costs because 

actual prices received are not collected by the survey, which is completed before all the grain has 

been marketed. Only part of the wheat is marketed at harvest. Much is stored in anticipation of a 

price rise after a harvest-time low. Some grain is never marketed but is used as feed by the farmer. 

Sometimes farmers will hold their wheat a year or more, to get better prices or to shift revenue 

between tax years.

The cost/price comparisons shown in the four graphs are summarized in table 2. The column for 

fi gure 11a in table 2 shows that if expected yields were achieved, 97 percent of the farms would have 

covered their operating costs if they had received the SAP of $4.87; 77 percent of the farms would 

have covered both their operating and ownership costs; and 34 percent would have covered their 

total costs. For comparison, the column for fi g. 11b, with realized yields, shows that 79 percent of 

the farms would have covered their operating costs if they had received the SAP of $4.87; 53 percent 

would have covered their operating and ownership costs; and only 18 percent would have covered 

their total costs.

The two right-hand columns in table 2 summarize fi gures 12a and 12b, which depict the percentage 

of total U.S. wheat production costs that would have been recovered by the SAP of $4.87 per bushel 

with expected and realized yields. For fi g. 12a, the operating costs on 98 percent of the national 

3Associated with each of the 2,330 sampled farms is a group of similar farms. For the farm distribution, the number of 

farms in each group is divided by the total number of farms represented by the survey to get the group’s percentage share 

of the total. These percentage shares are ranked by the per bushel costs found for the group’s sampled farm to create the 

cumulative distribution of farms. For the production distribution, the total wheat production of each group is divided by the 

total wheat production covered by the survey to get the group’s percentage share of the total. Each group’s percentage share 

is ranked by per bushel costs found for the group’s sampled farm to create the cumulative distribution of production.

Table 2

Percent of farms and production covering costs with SAP of $4.87 per bushel

Farms distribution Production distribution

Expected yields

(fi g. 11a)

Realized yields

(fi g. 11b)

Expected yields

(fi g. 12a)

Realized yields

(fi g. 12b)

Percent covering operating 

costs 97 79 98 93

Percent covering operating 

and ownership costs 77 53 78 67

Percent covering total costs 34 18 37 33

Source: USDA, Economic Research Service using data from USDA’s Agricultural Resource Management Survey, 2009 

wheat.
15

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0

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

0 10 20 30 40 50 60 70 80 90 100

Total costs

0

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

0 10 20 30 40 50 60 70 80 90 100

Total costs

Operating costs

Figure 11a

Cumulative distribution of wheat farms by cost 

levels using expected yield, 2009

Costs per bushel of expected yield ($/bu)

Percent of wheat farms

Figure 11b

Cumulative distribution of wheat farms by cost

levels using realized yield, 2009 

Costs per bushel of realized yield ($/bu)

Season average 

price = $4.87

Season average 

price = $4.87

Operating costs

Operating and 

ownership costs Operating and 

ownership costs

Sources: USDA, Economic Research Service using data from USDA's Agricultural Resource Management Survey, 2009 wheat.

Percent of wheat farms

Figure 12a

Cumulative distribution of expected wheat 

production by cost levels, 2009

Costs per bushel of expected yield ($/bu)

Percent of expected wheat production

Figure 12b

Cumulative distribution of realized wheat 

production by cost levels, 2009 

Costs per bushel of realized yield ($/bu)

Sources: USDA, Economic Research Service using data from USDA's Agricultural Resource Management Survey, 2009 wheat.

 0

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

0 10 20 30 40 50 60 70 80 90 100

Operating costs

0

 0

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

10 20 30 40 50 60 70 80 90 100

Percent of realized wheat production

Season average 

price = $4.87

Season average 

price = $4.87

Operating costs

Total costs Total costs

Operating and 

ownership costs

Operating and 

ownership costs
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expected wheat production would have been covered if it had been sold for the SAP of $4.87 per 

bushel; 78 percent of the wheat produced would have covered both operating and ownership costs; 

and 37 percent would have covered all its costs.

For figure 12b, with realized yields, the operating costs on 93 percent of national production would 

have been covered if it had been sold for the SAP; 67 percent of the wheat produced would have 

covered both operating and ownership costs; and 33 percent would have covered all the costs of the 

national production. (The percentages for 11b are lower than for 12b because abandoned, nonproductive acres are included in the sample.)
17

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Regional Variation in Production Costs for 

Expected Yields

Our analysis of the variation in regional production costs uses expected rather than actual yields. 

Most farmers budget their input expenditures, for example, the quantity of fertilizer to apply, 

based on their expected yield for the growing season. Expected yields avoid the complications of 

unusually favorable or unfavorable weather events. Table 3 shows the wide variation in regional 

yields, both expected and actual, in 2009. There is greater regional variation in actual yields than 

in expected yields. 

At the national level, the total of operating and ownership costs was $4.00 per bushel, using expected 

or normal yields. Of this total, operating costs were 60 percent and ownership costs were 40 percent. 

Fertilizer expenditures and capital recovery for machinery were the two largest cost items. 

The following regional analyses elaborate on the data in table 3.

North Central Region. This region represents 9 percent of wheat-planted area in the United States.

Wheat production practices there are geared to achieving the benefits of crop rotation and to 

producing straw for livestock bedding in addition to grain output. The North Central region reports 

the lowest per bushel total operating and ownership costs, $3.47, despite having the highest regional 

operating cost. The operating cost—$2.56 per bushel versus an average of $2.41 per bushel for 

all farms in the ARMS—is driven by per acre fertilizer and seed expenditures that are more than 

double the all-farm average. Fertilizer costs are much higher here than elsewhere because abundant 

moisture allows for a high-yield potential. To take full advantage of this potential, farmers apply 

more fertilizer than in other regions.

Seed costs are high compared with other regions because North Central farmers purchase wheat 

seed from a dealer every year instead of using wheat saved from the previous year. Most of the 

region’s farmers are small wheat producers whose individual wheat seedings are too small to justify 

the storage and cleaning facilities needed for “farmer-saved” seed wheat. The larger wheat producers 

elsewhere in the country have enough acreage to make saving wheat seed economically worthwhile. 

The North Central’s higher operating costs are offset by very low ownership costs per bushel of 

expected yield, $0.91. Because the high yields spread the ownership costs over many more bushels of 

harvested wheat, these costs are the lowest among all the regions.

Northern Plains. The largest wheat growing region in the United States, the Northern Plains 

accounts for 41 percent of all land planted to wheat. The Northern Plains has high production costs 

per bushel, with the highest ownership costs and the second highest operating costs. These high 

costs are due in part to low yields. The average expected yield from the survey for this region is the 

next to lowest among the regions, with only the Southern Plains yield lower. About 75 percent of 

Northern Plains wheat is of lower yielding, spring wheat varieties. Compared with the North Central 

region, moisture supplies are lower, reducing yield potential.

Fertilizer and chemical inputs account for the largest share of operating cost expenditures in this 

region. Fertilizer expenditures by Northern Plains producers are about equal to the national average 

but higher than the Central and Southern Plains, which grow only winter wheat. As noted, the 

shorter growing season of spring wheat requires a higher nitrogen fertilizer application rate.
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Table 3

Wheat production costs by region, 20091

Item Northwest2

Northern 

Plains2

Central 

Plains2

Southern 

Plains2

North 

Central2

All ARMS 

farms

Dollars per planted acre

Operating costs 

 Seed 17.98 14.39 10.07 11.68 30.17 13.99

 Fertilizer 50.32 41.73 40.03 29.19 104.89 43.36

 Chemicals 21.15 20.72 8.91 8.02 7.40 14.16

 Custom operations 10.76 7.75 10.78 10.00 9.78 9.41

 Fuel, lube, and electricity 21.79 8.87 13.40 13.84 8.63 12.22

 Repairs 28.50 18.16 21.46 15.53 13.36 19.09

 Other variable costs 4.26 0.22 0.13 0.03 0.58 0.53

 Interest on operating capital 0.22 0.16 0.15 0.13 0.25 0.16

 Hired labor 6.97 1.37 1.21 1.96 1.83 1.97

Ownership costs

 Capital recovery (machinery) 92.69 74.93 77.80 47.60 55.76 70.33

 Taxes and insurance 8.14 5.94 5.53 4.45 7.34 5.80

Other costs

 Opportunity costs of unpaid labor 19.13 13.54 17.01 17.22 16.09 15.87

 Opportunity cost of land 83.74 40.49 40.76 33.90 92.22 46.20

 General farm overhead 14.47 9.42 10.53 7.84 14.60 10.15

Total operating costs 161.96 113.37 106.15 90.38 176.89 114.89

Total ownership costs 100.83 80.87 83.33 52.06 63.10 76.13

Total operating and ownership costs 262.79 194.24 189.48 142.44 239.99 191.02

Total other costs 117.34 63.46 68.31 58.95 122.91 72.22

Total costs 380.13 257.70 257.79 201.39 362.90 263.24

Bushels per planted acre

Actual yield 59.5 43.7 43.2 16.3 59.8 40.2

Expected yield 67.0 45.5 47.6 37.5 69.2 47.7

Dollars per bushel 

Costs per bushel of actual yield

 Operating costs 2.72 2.59 2.46 5.56 2.96 2.86

 Ownership costs 1.70 1.86 1.93 3.20 1.05 1.89

 Operating and ownership costs 4.42 4.45 4.39 8.76 4.01 4.75

 Other costs 1.97 1.45 1.58 3.63 2.06 1.80

 Total costs 6.39 5.90 5.97 12.39 6.07 6.55

Costs per bushel of expected yield

 Operating costs 2.42 2.49 2.23 2.41 2.56 2.41

 Ownership costs 1.50 1.78 1.75 1.39 0.91 1.59

 Operating and ownership costs 3.92 4.27 3.98 3.80 3.47 4.00

 Other costs 1.76 1.40 1.43 1.57 1.77 1.51

 Total costs 5.68 5.67 5.41 5.37 5.24 5.51

—continued
19

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The higher chemical expenditures for the Northern Plains region are associated in part with the 

more humid spring-wheat producing areas, where there is greater use of fungicides because of a 

higher incidence of disease. Spring wheat producers also have higher herbicide expenses because 

of multiple applications to control weeds; 20 to 40 percent of the spring wheat acreage is sprayed 

with an herbicide before planting. In general, both the Northern Plains and Northwest spring wheat 

producers have more severe weed problems than producers in other regions.

Southern Plains. Like the North Central region, the Southern Plains represents about 9 percent of 

wheat-planted area in the United States. The Southern Plains region’s total expected operating and 

ownership costs per bushel are lower than the national average but still significantly above the North 

Central region’s costs. The Southern Plains has the lowest expected yield among all the regions 

because of limited moisture supplies in its semiarid parts. In addition, high temperatures during the 

growing season accelerate the maturity of the crop, which limits yield potential.

With low expected yields, fertilizer expenditures per bushel are the second lowest among the 

regions, only about half of the North Central’s expenditures. However, the region has the highest 

expenditures per bushel for custom operations and fuel, lube, and electricity, and total operating 

costs per bushel for Southern Plains producers are equal to the national average.

Ownership costs per bushel in the Southern Plains are the second lowest among the regions, after 

North Central. However, because of the low yields, the Southern Plains ownership costs are still 50 

percent above North Central costs.

Central Plains. The Central Plains is the second largest wheat-growing region in the United States, 

representing 28 percent of all land planted to wheat. Its total per bushel operating and ownership 

costs are nearly equal to the national average. The ownership costs are slightly above the national 

average and the operating costs slightly below. 

The expected Central Plains yield is nearly equal to the national average. It is significantly higher 

than the Southern Plains, despite parts of the region being semiarid. Temperatures during the 

growing season are typically not as high as on the Southern Plains, and the risk of drought is less.

Table 3

Wheat production costs by region, 20091

Item Northwest2

Northern 

Plains2

Central 

Plains2

Southern 

Plains2

North 

Central2

All ARMS 

farms

Percent of acres

Enterprise production practices

 Winter wheat 71.3 25.5 99.8 100.0 100.0 69.3

 Spring wheat 28.7 74.5 0.2 0.0 0.0 30.7

 Harvested 99.4 97.6 97.9 64.0 98.3 90.8

 Irrigated 21.1 1.2 4.5 7.0 0.0 4.9

1The data are an aggregation of irrigated and nonirrigated fields.

2Northwest—Washington, Oregon, and Idaho; Northern Plains—Montana, North Dakota, Minnesota, and South Dakota; Central Plains—

Kansas, Colorado, and Nebraska; Southern Plains—Oklahoma and Texas; and 

North Central—Ohio, Michigan, Illinois, and Missouri. 

Source: USDA, Economic Research Service using data from USDA’s Agricultural Resource Management Survey, 2009 wheat.

—continued
20

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Operating cost expenditures by input categories are each only slightly more or less than the 

national average.

Northwest. The Northwest region accounts for 13 percent of all wheat-planted land in the United 

States. Total per bushel operating and ownership costs there are lower than the national average 

because of higher yields, while operating costs are nearly the same as the national average.

The Northwest region’s expected yield is the second highest, nearly as high as the North Central’s, 

despite low rainfall. In part, this is because more than 20 percent of the region is irrigated, much more 

than in any other region. Wheat yields in the region are also boosted by relatively cooler temperatures 

during the growing season than in the Southern Plains, for example. Despite much higher yields in the 

Northwest than in the Northern Plains, fertilizer expenses are only slightly higher. About half of the 

Northwest’s wheat crop is soft wheat. To keep protein levels low, less nitrogen fertilizer is applied than 

with a hard wheat crop. The Northern Plains does not grow soft wheat.

Because the Northwest produces spring wheat, chemical costs are higher, especially for herbicides. 

Both the Northwest and the Northern Plains regions have higher chemical costs per bushel than the 

Central, Southern Plains, and North Central regions where winter wheat is grown. Seed costs are 

second only to the North Central’s high because of the Northwest’s higher use of certified seed. Fuel, 

lube, and electricity expenditures in the Northwest are above the national average, partly because 

this region leads the others in irrigation, for which these inputs are required. 
21

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Impacts of Adverse Weather in the Southern Plains, 2009

The realized yields achieved in 2009 reflect the impact of regional weather conditions, especially 

of the spring freeze and the drought that occurred in the Southern Plains. On average, producers 

in the Southern Plains expect wheat yields of 37.5 bushels per planted acre; the actual yield on the 

Southern Plains averaged only 16.3 bushels. Because of these low yields, 36 percent of the planted 

acres in the region were not harvested. Had more acres been harvested, actual yield in comparison 

with expected yield would have been even lower. 

We have classified each region’s producers into one of two cost categories relative to the national 

level. Cost is defined here as cost per bushel, with yield (expected or realized) based on planted area. 

The cost categories are:

• Low cost: producers whose operating and ownership costs per bushel are in the lowest 25 percent 

of all producers.

• High cost: producers whose operating and ownership costs per bushel are in the highest 25 

percent of all producers.

Figure 13 shows each region’s share of low-cost producers with expected yields and realized yields.

Figure 14 shows each region’s share of high-cost producers with expected and realized yields.

A comparison of the Southern Plains share in the two figures shows the impact of the adverse 

weather in the region in 2009. For the low-cost producers in figure 13, the Southern Plains share 

of low-cost producers with expected yields is 19 percent. With realized yields, the Southern Plains 

share of low-cost producers falls to 2 percent. The Southern Plains share of high-cost producers with 

expected yields is 14 percent. The region’s share rises to 40 percent with realized yields.
22

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Figure 13

Distribution of low-cost producers based on expected and realized yields in 2009

Sources: USDA, Economic Research Service using data from USDA's Agricultural Resource Management Survey, 2009 

wheat.

4%

20%

22%

35%

6%

31%

21%

2%

40%

19%

Northwest

Northern Plains

Central Plains

Southern Plains

North Central

Expected yields Realized yields

Figure 14

Distribution of high-cost producers based on expected and realized yields in 2009

Sources: USDA, Economic Research Service using data from USDA's Agricultural Resource Management Survey, 2009 

wheat.

Northwest

Northern Plains

Central Plains

Southern Plains

North Central

Expected yields Realized yields

7%

37%

27%

14%

15% 5%

24%

19%

40%

12%
23

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Conclusions

An analysis of the 2009 Agricultural Resource Management Survey (ARMS) data shows that 

most wheat producers would have covered all operating costs if yields were normal and they had 

received the 2009/10 season average price (SAP) of $4.87 per bushel. The $4.87 SAP covers about 

three-fourths of the sum of both operating and ownership costs and about a third of total costs. The 

comparison of these costs with the 2009 SAP is an aggregate analysis of U.S. wheat production 

costs. The price that individual wheat producers received in the 2009/10 marketing year depended 

upon many factors, including class of wheat grown, distance from principal markets, timing of sales 

during the marketing year, and any quality premiums or discounts received.

Regional climatic differences help explain the variation in costs across the country. The two largest 

cost items were fertilizer expenditures and capital recovery for machinery. These two cost items 

played important roles in making the wheat producers in the North Central region the lowest cost 

producers and the Northern Plains producers the highest cost producers. The relatively high yields 

in the humid North Central region allowed producers to spread their fixed machinery costs over 

many more bushels, so per bushel machinery costs were the lowest in the country. The spring 

wheat producers in the semiarid Northern Plains had relatively low yields, both because of moisture shortages and of the cold winters that force them to grow spring wheat varieties, which have 

high per bushel nitrogen fertilizer requirements. The low yields in the Northern Plains result in 

high machinery costs per bushel, which, added to the high nitrogen fertilizer requirement, makes 

Northern Plains wheat the most expensive to produce. 

The 2009 ARMS also captured the devastating cost consequences of the spring freeze and drought 

in the Southern Plains. The low yields and abandoned fields sharply raised per bushel costs in 

that region. Despite the loss of production in the Southern Plains in 2009, the United States still 

produced 2.5 billion bushels of wheat, slightly above the average of 2.2 billion bushels for the most 

recent 5 years. Because wheat is grown in most regions of the country, it is unlikely that wheat 

producers everywhere in the country will be adversely affected by a single weather event. 
24

U.S. Wheat Production Practices, Costs, and Yields: Variations Across Regions, EIB-116

Economic Research Service/USDA

References

Mahler, Robert L., and Stephen O. Guy. Soft White Spring Wheat. College of Agriculture and Life 

Sciences, University of Idaho, CIS 1101. July 2007.

National Association of Wheat Growers. Map of Where Wheat is Grown (U.S. Wheat). 2012. http://

www.wheatworld.org/wp-content/uploads/about-wheat-production-by-class-20110606.jpg.

Stark, J.C., R.L. Mahler, and T.A. Tindall. “Nutrient Management for Dryland Wheat Production in 

Southern Idaho.” Southern Idaho Dryland Winter Wheat Production Guide. Idaho cooperative 

Extension System, Bul 827, January 2004.

Vocke, Gary. Wheat Year in Review (Domestic): Lower Domestic Use and Exports Raise 2009/10 

Ending Stocks. U.S. Department of Agriculture, Economic Research Service, WHS-2010. 

December 2010 http://usda01.library.cornell.edu/usda/ers/WHS-yearbook//2010s/2010/

WHS-yearbook-12-22-2010_Special_Report.pdf.