2003 Economies of Scale Corn Production Budgets 1 15
500, 1000, and 2000 Acres
130 Bushel/Acre Yield
Reduced Tillage Practices 2
  ITEM     EXPLANATION PRICE PER ACRES 3   YOUR
UNIT BUDGET
                  500 1000 2000    
RECEIPTS
Corn $2.40 /bu $312 $312 $312  
Yield 130 bu/A
VARIABLE  COSTS 4
Seed (kernels) 28000 seed/acre 7% price adjust 33 31 29  
Fertilizer 5  
N (lbs.) 110 10% price adjust 29 26 24  
P2O5(lbs) 45 10% price adjust 12 11 10  
K2O(lbs) 50 10% price adjust 7 7 6  
Lime(ton) 0.5 10% price adjust 7 6 5  
Chemicals 6 7% price adjust 24 22 20  
Drying - Fuel & electric only 0.18 /bu 23 23 23  
Trucking - Fuel Only 0.04 /bu 5 5 5  
Fuel, Oil, Grease 7 6 5 5  
Repairs 8 13 13 18  
Miscellaneous 9 12 13 14  
Int. on Oper. Cap. 10 7 mo.  9.0% 7 7 7  
Hired Labor 11 0 0 0    
TOTAL VARIABLE COSTS -Per Acre 179 169 167  
-Per Bushel 1.38 1.30 1.28  
FIXED COSTS
Labor Charge (hrs.) 11 4.0 3.6 3.2 9.00 /hr 36 32 29  
Mach. And Equip. Charge 12 81 61 47  
Land Charge Rent 70 70 70  
Management Charge 13 4% 5% 6% of gross revenue 12 16 19    
TOTAL FIXED COSTS 200 179 165  
TOTAL COSTS -Per Acre 379 347 331  
-Per Bushel 2.91 2.67 2.55  
RETURN ABOVE VARIABLE COSTS (ACRE) 133 143 145  
RETURN ABOVE TOTAL COSTS (ACRE) (67) (35) (19)  
RETURN TO LABOR AND MANAGEMENT (ACRE) 14 (18) 13 28  
TOTAL RETURN TO LABOR AND MANAGEMENT FOR OPERATION 15 (9,044) 12,641 56,157      
 
16
1. This budget is intended to provide an example of how size of operations can affect the costs and returns of a crop enterprise.  It is only one of many possible scenarios and is not intended to provide the user with specific revenues, costs, or returns. 
2. Primary tillage implement is chisel plow.
3 Acreage is total acres of corn produced.  Does not include acreage of other crops produced on the same farm.
4 A price adjustment is included for some variable costs.  This reflects the possible price difference of an input based on quantity purchased.  The 1000 acre column is the base price, the 500 acre column pays base price plus price adjustment, the 2000 acre pays base price less price adjustment.  Some costs may not reflect adjustment due to rounding. 
5 Assumes only maintenance application of fertilizer needed, corn-soybean rotation, 3.8 O.M., 20 CEC, and soil test values of 25 ppm P/A and 150 ppm K/A.
6 Based on use of Bicep II Magnum
7. See specific calculations in Machinery Inventory. 
8. See specific calculations in Machinery Inventory.
9 Includes supplies, utilities, soil tests, small tools, crop insurance, etc…
10 Interest on all variable costs, except drying and trucking, for 7 months at 9% interest rate.
11. Part or all of labor may be a variable cost if paid labor varies with acres farmed. It’s a fixed cost if labor costs do not change with acres farmed.  Labor required per acre is increased 10% for 500 acres and decreased 10% for 2000 acres.
12. Machinery charge includes depreciation, interest, insurance, and housing.  Machinery is assumed to be 100% owned and recently purchased.  Tractors and implements increase in size and number as acreage of operation increases.  All machinery is assumed to b
13. Management charges are greater for more acres due to the likelihood of having more fields/farms to manage and more transporting of equipment.
14. Return to labor and management is the revenue less total expenses except operator labor and management charge.  It is a measure of the returns to the operator's labor and management.
15 Total return that can be expected for the entire operation.  (Total Returns = return per acre x number of acres)
Machinery Inventory 17
500 Acres  
Number in Inventory Machine Purchase Price($) Inventory Value($) Fuel ($/A) Repair Costs ($/A) # of times used
1 Fertilizer Spreader 10,400 9,400 0.11 0.23 1
1 15 ft. Chisel Plow 7,800 7,800 0.60 0.28 1
1 18 ft. Cultivator 11,000 11,000 0.32 0.29 1
1 6 Row Planter 13,700 13,700 0.50 1.37 1
1 30 ft. Sprayer 5,000 5,000 0.11 0.15 2
1 15 ft. Crop Cultivator 4,900 4,900 0.44 0.15 1
1 Small Combine w/ 15' head 144,900 144,900 1.93 5.90 1
2 240 bu. Gravity Wagons 3,500 7,000 1.20 0.84 1
1 Small Tractor 24,300 24,300 0.00 1.94 1
1 Medium Tractor 30,300 30,300 0.00 2.28 1
0 Large Tractor 112,600 0 0.00 0 0
1 Pickup Truck (1/2) 12,500 12,500 0.10   0.05 1
TOTAL 270,800 5.31 13.48
Fixed Cost Expense Rate =  15%
Total Annual Fixed Costs =  $40,620 Diesel Price ($/gal) = $1.00
Fixed Costs per Acre =  $81
1000 Acres  
Number in Inventory Machine Purchase Price($) Inventory Value($) Fuel ($/A) Repair Costs ($/A) # of times used
1 Fertilizer Spreader 10,400 9,400 0.11 0.23 1
1 23 ft. Chisel Plow 17,100 17,100 0.60 0.4 1
1 28 ft. Cultivator 19,400 19,400 0.32 0.33 1
1 8 Row Planter 21,500 21,500 0.35 0.68 1
1 50 ft. Sprayer 5,500 5,500 0.11 0.1 2
1 20 ft. Row Crop Cultivator 6,600 6,600 0.44 0.15 1
1 Med Combine w/ 20' head 162,400 162,400 1.60 5 1
2 240 bu. Gravity Wagons 3,500 7,000 0.60 0.84 1
0 Small Tractor 24,300 0 0.00 0 0
1 Medium Tractor 30,300 30,300 0.00 1.14 1
1 Large Tractor 112,600 112,600 0.00 3.84 1  
1 Pickup Truck (1/2) 12500 12,500 0.10   0.05 1
TOTAL 404,300 4.23 12.76
Fixed Cost Expense Rate =  15%
Total Annual Fixed Costs =  $60,645 Diesel Price ($/gal) = $1.00
Fixed Costs per Acre =  $61
2000 Acres  
Number in Inventory Machine Purchase Price($) Inventory Value($) Fuel ($/A) Repair Costs ($/A) # of times used
1 Fertilizer Spreader 10,400 9,400 0.11 0.23 1
1 37 ft. Chisel Plow 24,600 24,600 0.60 0.36 1
1 47 ft. Cultivator 33,500 33,500 0.32 0.34 1
1 12 Row Planter 32,700 32,700 0.35 0.69 1
1 50 ft. Sprayer 5,500 5,500 0.20 0.22 2
1 30 ft. Row Crop Cultivator 12,600 12,600 0.44 0.19 1
1 Large Combine w/ 30' head 204,100 204,100 1.93 4.15 1
4 240 bu. Gravity Wagons 3,500 14,000 0.60 1.68 1
2 Small Tractor 24,300 48,600 0.00 3.88 1
2 Medium Tractor 60,600 121,200 0.00 2.28 1
1 Large Tractor 112,600 112,600 0.00 3.84 1
1 Pickup Truck (1/2) 12,500 12,500 0.10   0.05 1
TOTAL 631,300 4.65 17.91
Fixed Cost Expense Rate =  15%
Total Annual Fixed Costs =  $94,695 Diesel Price ($/gal) = $1.00
Fixed Costs per Acre =  $47