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.
Farmers have many options and alternatives as they try to adjust to higher energy costs.
But it's important to realize that increases in energy costs affect more than a farmer's fuel bill. It is equally important for us to realize that these increases will not likely go away. For the foreseeable future, the costs of energy will remain relatively high and it is in our best interest to start to deal with how to adjust to increased prices. Check out the NPKnowledge web site from ISU Extension.