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Corn and soybeans represent the two largest agricultural receipts of South Dakota crop production. During
As with any other agricultural enterprise the total cost of production can be divided into operating and overhead costs. Operating costs are basically the yearly out-of-pocket expenses, whereas the overhead costs include all other costs such as the use of capital, taxes and insurance, opportunity cost of land, etc. According to the ERS soybean operating costs for our region were in 2014 roughly $4 per bushel. Since the price paid per bushel was $9.4 then the income less operating costs was $5.4 per bushel or $243 per acre for the South Dakota average yield of 45 bushels. Table 1 shows the operating costs (including labor) as a percent of the total costs.
The percentages in table 1 show which areas need to be targeted to significantly alter the operating cost of production. During 2015 custom rates for tillage, planting, and harvest operations have been listed on average 3.5% above 2014 rates. This was the result of higher costs of machinery, repairs and labor in spite of lower fuel prices. With
The two areas that can be targeted with the highest impact on the operating cost of production are saving fuel and selecting the right soybean seeds. Saving fuel is approximately half as effective in reducing costs as choosing the right seeds,
Source: Alvaro Garcia, South Dakota State University
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