Editor's note: We’ve gathered several experts to offer suggestions on trimming expenses in light of tighter margins in 2014
It’s no secret that profit margins are getting tighter. After a year of struggling crop prices, USDA predicted last month that 2014 won’t be much better, with average prices for corn, soybeans and wheat dropping lower than in 2013.
You can’t control the market, but you can control your expenses. Knowing your cost of production not only allows you to trim costs, but also when to lock in profit opportunities—and therefore, weather a challenging year.
Download these spreadsheets from Iowa State University to estimate your 2014 crop production costs.
Account for Value
Iowa farmer and AgWeb margins expert Chris Barron suggests that you not only need to know your costs, but also their value to your farm.
"Cash rents, equipment, seed and fertilizer are among the most costly individual line items. Collectively, these four items can easily make up 80% of your production costs," he says. "The challenge is to distinguish the difference between additional costs to your farm and understanding the value that comes back to your operation."
Accounting for value is also important when it comes to marketing.
"It’s critical to analyze and measure your expenses at a high enough level so that you don’t underestimate the price you need to cover all your expenses," Barron says.
Download these interactive spreadsheets, courtesy of Chris Barron, to help you analyze your operation’s production costs:
Keep Your Production Costs in Check for 2014
With grain prices dropping, it’s time to get creative. There is no one-size-fits-all-farmers answer, but there are numerous ways to more closely align costs with returns. Here are the money-saving tips we've gathered.