How to Cut Production Costs Without Cutting Yields

How to Cut Production Costs Without Cutting Yields

Cutting production costs this year is the name of the game, but not cutting yields is the trick. In the first Better Farming report from Hoosier Ag Today and the Purdue Center for Commercial Agriculture, we look at how to reduce the cost of planting your soybean crop while not cutting soybean yields.

Economist Jim Mintert explains the first thing is to think about cost per bushel, not cost per acre, “In agriculture, we tend to think about cost per acre, but it makes a lot more sense to think about it in cost per bushel. That allow us to not only look at the cost of the inputs we are using, but also the impact on the yield.”

Mintert says which production cost you chose to reduce will be what determines if there is a reduction in your yield. “It would be very short-sighted to reduce the expenses that also have  an impact of yield,” he said. “So we have focused our research on reducing production costs without reducing yield.”

The Purdue research suggests that seed is an area where you can reduce cost and not reduce yield. According to Purdue, 35% of variable expenses per bushel are accounted for by seed costs, 25% by fertilizer,  and 12% for pesticide. “When you think of the big bucket items, the No. 1 bucket is seed,” Mintert told HAT. So, if a producer can reduce seed costs, that can have a big impact on the bottom line.

From an economic standpoint, reducing your seed cost is one of the best ways to cut your soybean production costs because seed costs have been steadily rising over the past 10 years. Mintert stated, “In 2003 our per bushel soybean seed costs was about 50 cents a bushel, today it is averaging about $1.20 or even more.” But, wait a minute, won’t cutting seed use reduce your yield?  NO, said Mintert, and Purdue has the research to back that up.

That will be covered in next week’s Better Farming report.  If you don’t want to wait for the web and radio version , check out the  latest Better Farming video, sponsored by the Indiana Soybean Alliance.

Watch the Better Farming report