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As commodity prices are falling, it’s a good time to review your cost-of-production figures. You can do this on a whole-farm basis, but it’s even more beneficial to do it on individual fields or groups of fields.
Recently, I created a spreadsheet that allows me to take my home farms and rented farms and break out my cost of production on each.
The soil types and productivity of each of these groups of farms is different, so that’s why I’ve separated them into two different groups.
Thus, try to organize your farms into two or three groups so you can evaluate each of them separately.
If you have great disparity in yields, soil fertility and rental rates, you may want to break them down to the field level to really know what your cost of production and profit potential is on each farm.
You can then take numbers from your total production, and your overall farm cashflow, and appropriate them to the correct group of fields by crop.
My spreadsheet is set up in the rows with a production area, four expense areas, an income area and a profit-and-loss area. My columns are a group of columns for each group of fields for each crop type.
In each of these groups I have a column for total cost, cost/acre and cost/bushel so I can see the total cost, per-acre cost and per-bushel cost and income for each group of fields.
In my first rows of the spreadsheet…