Soybean Production Costs Internationally

[Jim Meade / Iowa City]

This U/Illinois paper says it's hard for US farmers to compete on a cost basis against foreign growers.  You knew that, right?  Well, how bad is it?

And what do we do about it?

Corn - beans - corn - beans, that's what most of us do about it.  Makes up appreciate quality, infrastructure and finance strengths the US market brings to the table, because we can't compete on the cost of production in many places.

http://farmdocdaily.illinois.edu/2016/09/international-benchmarks-for-soybean-production.html

"Conclusions

This paper examined yield, gross revenue, and cost for farms with soybeans in the agri benchmark network from Argentina, Brazil, Ukraine, and United States. Yield, gross revenue, and cost were substantially higher for the U.S. farms. Farms in Brazil and Ukraine were extremely profitable during the 2013 to 2015 period. The typical farms in Argentina and United States were closer to breakeven during this period."

[jec22]

Well, if I read the charts right, it looks like the US farmer has too high of overhead costs...now if that includes cost of living..explains a lot.  I am surprised we have lower direct costs.

[BA Deere]

Well, throw out cost of living, labor and land costs the US farmer is probably by far the lowest cost producer.   Now, that isn`t "good news" by any stretch.

[roarintiger1]

If we get our corn and soybean prices low enough here in the USA we can try to wipe out the competition.     If we do have the lowest price, does that make us the winner...........or the loser?    

[elcheapo]

I think the article in my mind caused more questions
Than answers...first...the price....single price
Used or local ?
Second, seed and chem cost.....and perhaps
How advanced the seed and chemical was.

It would have been good to show a price list
Of chemicals and seed and what they will
Equal to here

[hwr247]

does it matter how much it costs to produce beans, corn, wheat or whatever in the rest of the world? i just know this is not a good year for ag...for most of us it costs more than we will get back this year! probably for a few years!
The analysts tell us it will take time to chew thru this excess production like a year or two! What! by then we will have another years production to deal with. I remember the "other" times of excess production. by that i mean from the late 70's to mid 2000's! no matter how cheap commodities get people and animals will only eat so much even if its only $1.00 a bushel!
There have been all kjnds of programs to deal with excessive production from set aside acreage to the PIK program to CRP etc etc etc! The powers that be such as Fertilizer companies,seed sales, railroads, grain companies, chemical manufacturers, equipment manufacturers and of course the Board of trade Do NOT want acreage controls which affects their sales and their bottom line no matter how it badly the excessive production becomes on the farm! The only way to cut production is by drought somewhere in the world because if there usnt any anywhere then and only then will prices rise to a profitable level!

[Jim Meade / Iowa City]

If we want to minimize our losses we might be tempted to cut input costs to the bone even at the price of losing yield.  And we may still lose money.

If we need a supply problem in the world to get well, then maybe we should plant every acre and push for max yield so as to get the most income if the price improves.

Which way to go?

[BA Deere]

There probably will be a painful voluntary production coming from the fringe areas of production.   I don`t know what the benchmarks are, maybe 140bu corn and 40bu beans anything less and the price will be so low that almost anything else would "lose less" than corn or beans.  Doesn`t sound fun, but it may be what it will take, 210bu corn and 60bu beans will be a breakeven affair. 

But this year, the opportunity to sell $4 corn and +$10 beans was there for a short amount of time...it was there.

I suppose the Bears would say that the $13 beans and $7 corn and the ensuing plowed up golf courses is what`s giving us the sub $3 corn now.  So, until corn fields are leveled off and golf course turf is reseeded, the acres will be there.

Maybe a drought will bail us out, foreign or domestic, maybe Janet will bail us out with the currency, but if acres having to be cut is the way back to profitability, there will be blood.