2001 Economies of Scale Corn Production Budget 1
500, 1000, and 2000 Acres
130 Bushel/Acre Yield
No-Till Practices
Ohio State University
  ITEM     EXPLANATION PRICE PER ACRES 2   YOUR
UNIT BUDGET
                  500 1000 2000    
RECEIPTS
Corn $1.92 /bu $250 $250 $250  
Yield 130 bu/A
VARIABLE  COSTS 3
Seed (kernels)    28,000 seed/acre 7% price adjust 33 31 29  
Fertilizer 4  
N (lbs.) 140 10% price adjust 37 34 30  
P2O5(lbs) 45 10% price adjust 12 11 10  
K2O(lbs) 50 10% price adjust 7 7 6  
Lime(lbs) 1000 10% price adjust 8 8 7  
Chemicals 5 7% price adjust 34 32 30  
Drying - Fuel & electric only 0.18 /bu 23 23 23  
Trucking - Fuel Only 0.03 /bu 4 4 4  
Fuel, Oil, Grease 6 4 4 4  
Repairs 7 15 12 13  
Miscellaneous 8 13 13 13  
Int. on Oper. Cap. 9 6 mo. 9.0% 7 7 6  
Hired Labor 10 0 0 0    
TOTAL VARIABLE COSTS -Per Acre 198 184 174  
-Per Bushel 1.52 1.42 1.34  
FIXED COSTS
Labor Charge (hrs.) 10 3.3 3.0 2.7 8.00 /hr 26 24 22  
Mach. And Equip. Charge 11 74 51 42  
Land Charge Rent 70 70 70  
Management Charge12 4% 5% 6% of gross revenue 10 12 15    
TOTAL FIXED COSTS 180 158 149  
TOTAL COSTS -Per Acre 379 342 323  
-Per Bushel 2.91 2.63 2.48  
RETURN ABOVE VARIABLE COSTS 51 65 76  
RETURN ABOVE TOTAL COSTS (129) (93) (73)  
RETURN TO LABOR AND MANAGEMENT13 (93) (56) (36)  
TOTAL RETURN TO LABOR AND MANAGEMENT FOR OPERATION 14 (46,306) (56,065) (72,990)  
                           
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. Acreage is total acres of corn produced.  Does not include acreage of other crops produced on the same farm.
3. 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 column pays base price less price adjustment.  Some costs
may not reflect adjustment due to rounding.
4. Assumes only maintenance application of fertilizer needed, continuous corn 3.8 O.M., 20 CEC,
and soil test values of 25 ppm P/A and 150 ppm K/A.
5. Based on use of Roundup Ultra, 2-4D, Basis Gold, Banvel, and COC
6 See specific calculations in Machinery Inventory. Lubrications costs are assumed to be 15% of fuel costs
7 See specific calculations in Machinery Inventory.
8 Includes supplies, utilities, soil tests, small tools, crop insurance, etc…
9 Interest on all variable costs, except drying and trucking, for 6 months at 10% interest rate.
10 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.
11 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 be used only on operator's farm, no custom work included.  The following page shows the machinery inventory for each size operation.
12 Management charges are greater for more acres due to the likelihood of having more fields/farms to manage and more transporting of equipment.
13 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.
14 Total return that can be expected for the entire operation.  (Total Returns = return per acre x number of acres)
Machinery Inventory
500 Acres  
Number in Inventory Machine Purchase Price          ($) Inventory Value       ($) Fuel (gal/A) Repairs ($) # of times used
1 Fertilizer Spreader 9,400 9,400 0.13 0.26 1
1 6 Row Planter 26,000 26,000 0.50 2.00 1
1 30 ft. Sprayer 4,500 4,500 0.20 0.28 2
1 Small Combine w/ Head 139,100 139,100 1.60 7.8 1
2 185 bu. Gravity Wagons 2,500 5,000 0.60 0.84 1
1 Small Tractor 23,200 23,200 1.94 1
1 Medium Tractor 27,200 27,200 2.28 1
0 Large Tractor 106,600 0 0 0
1 Pickup Truck (1/2) 12,500 12,500 0.10   0.05 1
TOTAL 246,900 3.13 15.45
Fixed Cost Expense Rate = 15%
Total Annual Fixed Costs = $37,035 Diesel Price ($/gal) = $1.00
Fixed Costs per Acre = $74
1000 Acres  
Number in Inventory Machine Purchase Price               ($) Inventory Value              ($) Fuel (gal/A) Repairs ($) # of times used
1 Fertilizer Spreader 9,400 9,400 0.13 0.26 1
1 8 Row Planter 30,900 30,900 0.50 2.37 1
1 60 ft. Sprayer 6,000 6,000 0.20 0.22 2
1 Medium Combine w\ Head 157,100 157,100 1.60 4.13 1
2 240 bu. Gravity Wagons 4,000 8,000 0.60 0.42 1
0 Small Tractor 23,200 0 0 0
1 Medium Tractor 27,200 27,200 1.14 1
1 Large Tractor 91,400 91,400 3.84 1
1 Pickup Truck (1/2) 12,500 12,500 0.10   0.05 1
TOTAL 342,500 3.13 12.43
Fixed Cost Expense Rate = 15%
Total Annual Fixed Costs = $51,375 Diesel Price ($/gal) = $1.00
Fixed Costs per Acre = $51
2000 Acres  
Number in Inventory Machine Purchase Price             ($) Inventory Value                  ($) Fuel (gal/A) Repairs ($) # of times used
1 Fertilizer Spreader 9,400 9,400 0.13 0.26 1
1 12 Row Planter 53,600 53,600 0.50 4.12 1
1 60 ft. Sprayer 6,000 6,000 0.20 0.22 2
1 Large Combine w\ Head 199,500 199,500 1.60 3.77 1
4 240 bu. Gravity Wagons 4,000 16,000 0.60 0.23 1
2 Small Tractor 23,200 46,400 0.49 1
2 Medium Tractor 57,300 114,600 1.2 1
1 Large Tractor 106,600 106,600 2.24 1
1 Pickup Truck (1/2) 12,500 12,500 0.10   0.05 1
TOTAL 564,600 3.13 12.58
Fixed Cost Expense Rate = 15%
Total Annual Fixed Costs = $84,690 Diesel Price ($/gal) = $1.00
Fixed Costs per Acre = $42