The economic analysis includes costs that reflect as closely as possible the costs that southern Wisconsin farmers incur. Financial results date from 1992, the first year that a full rotation had been completed. The researchers compared the three cash grain cropping systems in terms of gross margins. Gross margins is a good measure to use rather than net returns, because it does not include overhead costs which can vary tremendously between farms, Schuster says. It is calculated by subtracting variable costs of production, like seed, fertilizer, chemicals, drying costs, repairs, supplies, and fuel from gross revenue.
Gross revenue is based on yield, quality, and price when harvested.
The gross margins for individual crops are summed to determine the gross margins for each system. The table below shows that average gross margins for the continuous corn system are less than those of the multi-crop systems. Also, average variable input costs per acre decrease as rotation complexity increases at both sites. Although the maximum gross margins per acre are similar at both sites, the range in average gross margins per acre for all cropping systems has been greater at Lakeland than at Arlington. The poorly drained soils at Lakeland appear to be more sensitive to weather extremes, resulting in more yield variation, Schuster explains.