Is Corn Profitable on the Lower Eastern Shore of Maryland?
Eddie Johnson
Wicomico County Extension
E-mail: ejohnso3@umd.edu
410.749.6141
03/06/07
Research Question: The agricultural land use of the Lower Eastern Shore is dominated
by field crop production, mostly in support of the poultry industry. In the TriCounty area of the Eastern Shore of Maryland (Worcester, Wicomico and
Somerset Counties) an average of 12.5% of the State’s grain (corn and soybeans)
is produced (25% of the production on the Eastern Shore). Demand for corn by
the poultry industry alone has been estimated to exceed Maryland’s average
annual production by 50%. Ethanol will demand more corn than we can possibly
produce.
Literature Summary:
A summary of research by Linda Foreman with USDA (Statistical Bulletin No.
(SB974-1) 28pp, August 2001 indicates that the production costs for a bushel of
corn ranged from an average of $1.19 per bushel for those farmers in the lowest
quartile to $3.67 per bushel for corn farmers in the highest quartile, ranked by
production costs per bushel. Producers with high corn production costs per bushel
tended to have both lower than average yields and higher than average corn costs
per acre. Corn producers in the Heartland and Prairie Gateway had lower corn
production costs per bushel than corn producers in the Northern Crescent and
Southeast. Part-time farmers and farmers with small corn acreage tended to have
high corn production costs per bushel.
Allen Baker at webadmin@ers.usda.gov in a similar summary entitled:
Characteristics and Production Costs of U.S. Corn Farms reports that the
operating and ownership cost for producing a bushel of corn in 2001 ranged from
an average of $1.08 for the quarter of U.S. producers with the lowest costs to an
average of $2.98 for the quarter with the highest costs. Production costs varied
considerably, depending on yields, farm location, tillage practices, irrigation,
previous field usage, enterprise size, and weather.
…
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Study Description: A Corn Improvement program was started in Wicomico County in
1986 through a joint effort between the University of Maryland Cooperative
Extension Service and local the poultry industry. Since 2000, the Corn
Improvement has expanded to include a tri-county area of Wicomico, Worcester
and Somerset Counties.
A field is selected by a farmer, which is then measured by an employee of the
county Extension office. Harvest is completed in the measured section and
moisture of the corn in the measured area is determined as it is loaded into a
truck. Specific production information that was performed by the farmer is
recorded by the extension personnel to determine Best Management Practices
used and all cultural practices. All associated costs of production are determined
using current Custom Rates provided by the National Agricultural Statistics
Service. Land charges are fixed at $75 per acre; seed, fertilizer and chemical cost
are determined by an average of 3 local dealers’ prices for a cost for each product
used in the field. Irrigation is a fixed cost for system of $70 per acre plus $1.80
per inch of water applied.
Applied Questions:
Is conventionally grown corn cheaper to produce than no—till corn?
http://www.ag.auburn.edu/aux/nsdl/sctcsa/Proceedings/1991/Bradley.pdf
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World Wide Trends In No-Till Farming - Competing with the competition, an
article by John F. Hebblethwaite and Dan Towery from the Conservation
Technology Information Center West Lafayette, Indiana, USA, report that cost in
each country follow the same trend with conventional higher than no-till even in
other countries. The US averaged $0.12 higher and Agrentina and Brazil were
$0.20 and $0.17 respectively.
Global competitiveness in agriculture is growing. This becomes more obvious as
government support declines. With declining price supports in the USA,
producers will need to reduce input cost per unit of production like any other
production industry. No-till crop production and the cropping flexibility, provided
by the 1996 Farm Bill, will allow US producers to venture boldly into production
systems that are more efficient and profitable. Many of these systems, based on
no-till and crop rotation, have already been developed by our neighbors around
the world. We can learn from them as they have learned from us.
This Lower Shore Corn Improvement Program study resulted in final costs of
production for conventional versus no-till corn production to be within $0.10 per
bushel.
Which corn variety performs the best on the Lower Eastern Shore of Maryland?
http://www.nrsl.umd.edu/extension/crops/corn/2006AgronomyFacts54Final.doc
Developed by Dr. Robert Kratochvil, University Agronomist indicates no one
variety repeatedly outperformed another in these studies. Average variety life was
less than five growing seasons.
What is the actual cost of production for an individual farmer?
This program derives a specific cost of production for each farmer who enters
their farm into the Corn Improvement Program. Every participant will have an
individual cost per bushel of production calculated. Each can only pick
themselves from the literature and power points presented.
Recommendations: The program results in an annual maximum economic yield
determined by the six week average of harvest prices. Final costs for the farmer
are determined as cost per bushel, which is steadily increasing each production
year (with the exception of 2002 due to drought). A Best Managers Award is
given to the farmer with a combination of highest yield and lowest inputs (Table
1). A characteristic of this program that is unique, and increases the farmers’
satisfaction of the program is the use of portable scales. The use of scales saves
the farmers’ time as well as eliminating any pre-weighing of the truck.
3
Year
Price
Yield (bu/acre)
2000
2001
2002
2003
2004
2005
2006
Average
$1.92
$2.10
$2.90
$2.45
$2.20
$2.15
$2.89
$2.37
203
215
235
204
232
168
254
216
Production Cost
(per acre)
$1.08
$1.26
$1.80
$1.27
$1.29
$1.46
$1.41
$1.36
Table 1. The Best Managers Award: Lowest Cost of Corn Production on the Lower
Eastern Shore of Maryland. 2000-2006.
During the seven years of this program, both irrigated and non-irrigated corn yield were
represented. Corn farmers in the program have averaged 42.4 bushels per acre higher
than county averages. Table 2 represents the average yields of farmers involved in the
program compared to the county average.
Table 2. Yields of Irrigated and Non-Irrigated Corn in Lower Eastern Shore of
Maryland. 2000-2005.
250
Irrigated
Non-irrigated
Program Average
County Average
Yield (bu/acre)
200
150
100
50
0
2000
2001
2002
2003
2004
2005
2006
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The overall cost per acre of all participants (average) and the Best Manager’s Cost
are shown in Table 1. This can be viewed alongside the average profit per acre
and price per bushel that was earned by the farmers participating in the program.
The cost of irrigated corn is steadily increasing but always profitable. In 2002,
despite the drought the true cost production exceeded the price of corn by $0.32
per bushel. Table 3 shows the average cost per acre, the best manager’s cost and
the average profit per acre.
Table 3 Profitability
3.50
Price/bu
Average cost/acre
3.00
Best Manager's Cost
Average Profit/acre
2.50
2.00
1.50
1.00
0.50
0.00
2000
2001
2002
2003
2004
2005
2006
Individual yields and associated cost 2005 with corn at harvest price of $2.15. All
cost are considered. As a group they averaged $89.00 per acre NET. We can
produce corn economically utilizing poultry litter as our nutrient base. The least
cost per bushel of production was $1.46 with three tons of litter as the fertilizer
cost. The farmer with $118.00 tillage cost per acre used conventional tillage and
the rest used NO Till.
Table 4 AVERAGE COST PER BUSHEL OF PRODUCTION
3.50
Price/bushel
Irrigated
Non-Irrigated
3.00
2.50
2.00
1.50
1.00
0.50
0.00
2000
2001
2002
2003
2004
2005
2006
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Table 4 shows the average cost of production and in 2006 Irrigated corn cost
$1.89 per bushel to produce and non irrigated corn cost an average of $1.66 per
bushel to produce
Table 5 TOTAL COST, AND INPUT COST
Per acre
yield
Cost
seed
fert
chem
Cost/
Bushel
254
357
40
80
26
1.41
208
314
43
53
32
1.51
230
352
47
84
27
1.53
211
326
47
67
38
1.54
211
333
47
67
38
1.58
190
312
45
83
17
1.64
178
298
50
67
18
1.68
199
363
37
61
17
1.82
217
395
53
67
11
1.83
151
280
19
63
14
1.85
203
396
49
84
58
1.95
214
417
49
118
58
1.95
219
442
57
60
31
2.02
206AVE
352AVE
45AVE
73AVE
30AVE
1.71AVE
Table 5 compares each individual input cost of seed, fertilizer, and chemicals,
total cost is compared and the average cost per acre of production was $352.00
per acre. $19.00 was low cost on seed (population of 15K by mistake) $53.00 for
fertilizer (2.5 T of Poultry liter plus 50# of Nitrogen) Chemicals show a great
range of difference depending on the chemical, application rate and if an
insecticide was used.
Table 6 RANK BY YIELD AND NET
Table 6 compares the ranking of yield and net. Lots of Corn data only focuses on
yield without regard to input cost or the bottom line (net). Only 3 farmers have
the same rank in both columns (1,2, 13). It is interesting to note that a 219 bu.
Yield will rank 3rd in yield but ties for 11th in net. The reason is the fixed charge
per acre of irrigation equipment of $70.00.
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Per acre
yield
Cost
Rank/yield
Rank
net
$NET
Cost/
Bushel
254
357
1
1
376
1.41
208
314
8
3
288
1.51
230
352
2
2
312
1.53
211
326
6
4
284
1.54
211
333
7
5
276
1.58
190
312
11
6
237
1.64
178
298
12
8
215
1.68
199
363
10
9
213
1.82
217
395
4
7
230
1.83
151
280
13
13
156
1.85
203
396
9
11T
190
1.95
214
417
5
10
201
1.95
219
442
3
11T
190
2.02
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Table 7 provides a brief summary of the data, net ranking , cost per bushel and
a description of the cultural practices used in the field. Conv/pl/4.5 would mean
conventional corn with 4.5 tons of poultry litter per acre. NT is no till and IRR is
irrigated , one farmer ripped the ground then planted NT while one used commercial
fertilizer.
Per acre
yield
Gross
cost
net
description
Cost/
Bushel
254
735
357
377 -1
Conv/pl/4.5
1.41
208
603
314
289 -3
NT/pl/2.5
1.51
230
664
352
312 -2
NT/pl/2.5/S
1.53
211
610
326
284 -4
NT/pl/3
1.54
211
610
333
276 -5
NT/pl/3
1.58
190
550
312
238 -6
NT/pl/2/S
1.64
178
514
298
216 -8
NT/pl/2
1.68
199
576
363
213 -9
NT IRR/3.5pl
1.82
217
626
396
230 -7
NT IRR/3pl
1.83
151
437
280
157 -13
Conv/S
1.85
203
587
396
190 -12
Rip/NT/3pl
1.95
214
618
417
201 -10
NT/comm/Fert
1.95
219
633
442
191 -11
Conv/IRR/pl3
2.02
Summary: A grant was written to the MD State Police to obtain six portable scale units,
giving us the capability of weighing a 10 wheel truck without split weighing. We place
plywood under the scales if ground is extremely sandy, otherwise we use a field road and
make out fine. Any one can obtain a used set of scales from the state police. They are
constantly updating equipment. It has given us the ability to weigh and measure yields in
the field of corn, beans and pallets of vegetables, wagon loads of hay or forage. It is the
best method of manure calibration available today. We can weigh and load spreaders at
end of house, then spread it and measure the area covered.
The research indicates with 2-3 tons of poultry litter supplying the nitrogen corn can be
quite profitable on the Eastern Shore of Maryland. In 4 of the 7 years the data indicates
that application of 2 tons of poultry litter and 50 lbs of nitrogen were the most
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economical. 3 tons of manure and no nitrogen are economical if price of manure is
relatively cheap. Also a longer term problem may be arising because of excess
Phosphorous. Maryland has strict Nutrient Management Laws including a Phosphorous
Site Index, which may limit the amount of poultry litter to crop removal levels of
Phosphorous. We have seen the %P become lower in the litter samples because of
feeding lower P levels to the poultry and the addition of Phytase in the feed. Many
growers use Allum to control the ammonia in a new flock and alum tends to tie up the
phosphorous. If we can lower the P in the manure to 40lbs per ton, we can get back to
the 2 ton rate of application and continue to produce corn very economically.
Traditionally we have used $8.00 per ton of manure and in discussing it with farmers they
can have manure delivered to their farm at $10.00 per ton and then an application fee of
$5 per ton making a cost of $15.00 per ton of manure for the crop year 2007. Even with
the additional cost in the manure, we can still produce corn at a very reasonable cost of
production.
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