The recent increases in the price for energy have resulted in higher costs of production for Iowa farmers. The ISU estimated costs of crop production show that corn costs of production will rise by more than 5 percent from 2000 to 2001 as a result of higher petroleum costs. Soybean costs are not rising as much because nitrogen fertilizers are not used on this crop. What does this mean Cost of production estimates have varied considerably over time. In the ISU series, the highest cost estimates were in the early 1980s.
Land is the single biggest cost of production component.
For soybeans, the cost of land averages more than 40 percent of total production costs. For corn, land costs on average make up 35 percent of the cost of production. In the past, changes in the cost of production have been primarily due to changes in the cost of land. There have been shifts in the relative portion of other cost components as technology and farming practices change. Today's situation is different because increases in the cost of production are almost entirely the result of changes in the price of energy.