News

Production cost decline, but not enough

The chief economist for Senate Ag Republicans says production costs won’t provide farmers much relief in 2024.  

John Newton tells Brownfield as the farm bill debate continues — understanding costs is critical. 
“They’re the third highest all time,” he says. “Look at the break-even cost of production for some growers given that we are going into the farm bill, given that there is a lot of conversation about the risk management tools that farmers use in the farm bill.”

He says costs are projected to decline slightly for 2024. But, input costs remain sticky. “The challenge is that commodity prices are falling,” he says. “Corn is at $4.80 per bushel in the latest WASDE, that’s below the break-even cost of production according to ERS data for 2023.”

For 2024, rice is projected to have the highest cost-of-production at nearly $1,200 per acre, down 1.8% on the year, peanuts are a close second at $1,172 per acre, down 1.6%, followed by cotton at $866 per acre with a decline of 1.6%.  Corn production costs are projected to decrease 3.6% at $856 per acre, soybean costs are projected to decline 1.4% at $613 per acre, and wheat rounds out the crops at $416 per acre, down 2.3%.

Newton says the farm economy has changed significantly and Senator Boozman remains committed to updating the references price used in the 2023 Farm Bill. “You look at the support system that they have in their Title 1 Programs,” he says. “You know that those were established using information that’s over a decade old.”

He says if reference prices aren’t updated in this farm bill — it will have to wait another 5 years and at that point, the figures will be closer to 20 years old.  

Reference prices determine when farmers enrolled in the Price Loss Coverage Program receive subsidies.  PLC triggers payments when the average marketing price for a year is lower than the reference price for a commodity.