Clemson Extension crop budgets provide a good basis for cost comparisons. The returns in our budgets are based on futures and cash contract prices available to producers as of April 11. For short-run planting decisions, income above variable cost is the appropriate measure by which to compare these alternative enterprises. Variable costs are those cost that vary with the level of production or acres planted, such as, seed, fertilizer, chemicals and fuel. On most row crop farms, cotton, corn and soybeans compete for the same land, labor and machinery, thus the fixed cost, i.e., depreciation, interest on investment and insurance, associated with these crops will not change as a result of the planting decision.
Net returns are very sensitive to relative yield levels of the different crops.
Corn yields in the state have probably fluctuated most widely in recent years. Our annual crop budgets break down fixed and variable costs based on standard accounting methods. Fertilizer is a good example - if you don't produce a crop, you don't need any fertilizer. Fixed costs will be incurred even if production doesn't occur. Depreciation is the classic example.