While the challenges have stacked up this year, it’s time to start thinking about producing your 2026 costs. Prepay season is here, and we’re looking at some decent marketing opportunities for the year ahead.
The term “cost of production” seems a bit disconnected at times because, in reality, we choose our costs. Sometimes, we forget this. We feel that things are out of our control — land, equipment, inputs, etc. This simply isn’t true. You get to make the decision on what you spend, when and where. If you’re having a visceral reaction to this fact, I suggest you take some time to consider whether this is the truth (it is).
Look at what some of the best farm operations we get to work with do:
• Don’t get over your skis on land costs. If it makes sense from a contribution margin, then go for it. If it is paying high cash rent or unfavorable lease arrangements just to cover more acres, it isn’t worth it.
• Keep your fertility in check. This means not skimping when you need to apply and spreading fertilizer strategically when you can afford to not broadcast straight rate on every acre. I told my agronomist my budget by crop acre this year, and he adjusted phosphorous and potassium applications to get the most yield bang for our buck. I produced my cost.
• Keep the return to management costs in line. You get to decide if you get a new vehicle, take a trip or pay for college. It is easier said than done, but we need to take personal responsibility.
• Yield is the No. 1 way to reduce your cost of production — bar none. Is the market asking for more corn? Not overall, but you also need it to maintain profitability. Commodity markets weed out inefficiency, and the system needs you to produce more or market better to stay viable.
Use the focus areas above to dial in and produce your costs for the crop year ahead.
Does this feel a bit harsh? I’ll commiserate for a while. If you have tried to stay the low-cost producer, and your market and conditions have driven you to exasperation or additional income sources or mental pressure, you need to evaluate where you’re at. If you hate what you’re doing, stop doing it. However, you should also recognize we are likely at the bottom of a cycle. These things come and go, and I do believe in better days ahead. I was always told to never quit on a bad day. Be financially responsible and accountable to your spouse, children, lenders and business partners, but if you can afford to work through this, there will be opportunities ahead. If you need someone to talk to or just to vent, I’m a phone call away.
