Organic Crop Production Enterprise Budgets - Transition to Organic Partnership Program

An enterprise budget is an estimate of the costs and returns to produce a product. This publication looks at enterprise budgets for organic growers, reflecting a four-year rotation using corn, soybeans, oats with alfalfa and a second year of alfalfa
Midwest

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2019

Organic Crop Production
Enterprise Budgets
An enterprise budget is an estimate of the costs
and returns to produce a product (enterprise). For
example, a conventional Iowa corn and soybean
producer would be interested in developing both a
corn and soybean enterprise budget. Organic growers
may wish to develop budgets for three to six different
products, depending upon the number of crops
within their rotation. These budgets reflect a fouryear rotation using these crops: corn, soybeans, oats
with alfalfa, and a second year of alfalfa. Changing
the rotation to include a second year of corn after
soybeans, for example, would affect the corn budget
described here.
Why use enterprise budgets? In economic terms,
enterprise budgets help to allocate land, labor, and
capital, which are limited, to the most appropriate
use. The person who controls the resources defines
their most appropriate use, for goals that include
maximizing profits, minimizing soil loss, or others.
The estimated costs and returns illustrated here are
based on a long-term study located at an Iowa State
University research farm in southwestern Iowa. The
data was modified to more accurately reflect average
Iowa results based on feedback from organic farmers
who reviewed the budgets.

Budget Format
Enterprise budget formats vary. Some are complex.
Others are quite simple. The budgets included in this
publication are divided into five sections:
Receipts. The first section illustrates the total receipts
the enterprise provides on a set unit(s). Records
should be kept on both a sales unit (per bushel or
per ton) and land unit (per acre) basis. Sales prices
are those listed by the USDA Agricultural Marketing

Service (AMS) (www.ams.usda.gov/market-news/
organic) using yields based on those received by a wide
range of organic producers over the last five to six
years. Note the alfalfa price for the establishment year
is lower than the second year, due to lower-quality
straw residue in the fall hay cutting in year one.
Preharvest. The second section includes the costs
of planting and growing the product (preharvest
costs). For example, once the seed is planted or a field
operation is completed, the cost has occurred and
needs to be covered from some source. Additionally,
there is a time delay between preharvest expenses and
the time the product is sold. These expenses may have
to be covered from borrowing, savings, or some other
source. Therefore, interest on preharvest costs should
be included as a production expense.
Preharvest costs for the oat and alfalfa budgets are
referred to as establishment costs and are divided
equally between the two crops (years). Dividing
establishment costs allocates the first-year costs
of field preparation and seeds over the life of the
establishment, which in this case is two years. The
allocation process is similar to that conducted for
Estimated Costs of Crop Production in Iowa (FM1712,
https://store.extension.iastate.edu/Product/1793) and
Estimated Costs of Pasture and Hay Production
(AG96, https://store.extension.iastate.edu/
Product/789).
Note that machinery has both a variable and fixed
component. The machinery cost estimates for field
operations were also taken from FM1712. Field
operations listed are those typically conducted by
organic producers. Seed costs are estimates of average
prices paid. Fertility can be supplemented with
various products ranging from liquid swine manure to

FFED0027 November 2019

bedded compost from dairy, poultry, or other livestock
production systems.
The costs of the products vary substantially based on
availability, distance from farm, and fertility content.
This corn budget assumes dry chicken manure is
readily available from a nearby source and provides
enough nitrogen for the rotation used. The application
of the manure is included in the listing of field
operations and the purchase price for the manure is
listed under fertilizer.
The amount of phosphorus (P) and potassium (K)
needed for the entire four-year rotation will depend
upon crop yields (removal rates) as well as the fertility
content and application rate of the manure.
Miscellaneous expenses vary and include cost items
related to the general production practices for the crop
that are either infrequent (not annual) or don’t quite
fit into the other cost categories. For organic crops,
miscellaneous expenses may include costs related to
organic certification.
Harvest. The third section is the harvest component.
Handling and hauling costs are included with the
harvesting activity, and machinery has a variable and
fixed component. Again, the machinery cost estimates
were taken from FM1712.
Labor and Land. The fourth section relates to labor
and land ownership costs. Labor is considered a fixed
cost in these budgets because most labor is provided
by the operator, family, or permanent hired labor.
The hours per acre are those typically provided for

fieldwork for each crop. The soybean budget includes
one hour of hand-weeding in addition to the one hour
per acre for pre-harvest and harvest machinery. No
labor was added for traveling to and from the field,
repairs, or other activities related to production. These
activities would add approximately 1.5 hours per acre
to the fieldwork times listed in the budgets.
The land use is charged a cash rent equivalent of
$219.00 per acre. This charge reflects ownership costs
and a return to the land asset regardless of whether
the land is actually owned or rented. Depending upon
the debt level and interest rate, principal and interest
payments for purchased land could be higher than the
cash rent equivalent listed.
Summary of Returns. The last section is the summary
of returns. The total costs are variable costs and
ownership costs combined. The return over variable
costs is the total of receipts minus total variable
costs. The return over all costs is total receipts minus
combined variable and ownership costs. Return to
management is the economic return over total costs.
This is the amount left over to cover family living
expenses, savings, future investments, etc.

Limitations
The illustrated budgets are to be used as an indication
of what a particular crop could average over time and
location. Individual farm results will vary from these
numbers based on soil types, location to markets,
availability to manure sources, and managerial ability,
among other considerations.
The budgets include receipts as well as costs through
harvest and handling. Marketing costs have been
excluded. Note that prices listed from AMS are FOB
from the farm, indicating the buyer of the crop will
pay for transportation from the farm to their selected
destination. Prices represent typical prices reported
throughout the year by AMS but are not indicative of a
weighted season average price received. Alfalfa prices
reflect prices received by farmers at Iowa hay auctions
for premium alfalfa. Transportation costs to market are
not included. Oat straw is estimated to be 70% of first
year alfalfa price, to reflect differences in feed value.
Additionally, first year alfalfa price is estimated to be
85% of the premium price received in the second year–
again because of feed value differences.
Estimated Costs of Crop Production in Iowa (FM 1712),
Estimated Costs of Pasture and Hay Production (AG
96), Using Manure Nutrients for Crop Production (PMR
1003), and A General Guide for Crop Nutrient and
Limestone Recommendations in Iowa (PM 1688) are
available for download from the ISU Extension Store at
http://store.extension.iastate.edu.

FFED 0027 | Organic Crop Production Enterprise Budgets

Organic Corn Budget (2018)
RECEIPTS

QUANTITY

$/UNIT

TOTAL

Organic corn sales

153 bushels

$9.80

$1,499.40

TOTAL RECEIPTS

153 bushels

$9.80

$1,499.40

PREHARVEST

QUANTITY

FIXED COST

YOUR ESTIMATE

VARIABLE COST

YOUR ESTIMATE

Plow (moldboard)

$9.20

$9.80

Tandem disk

$4.70

$3.50

Apply chicken manure

$2.00

$1.60

Field cultivate

$2.70

$2.80

Plant

$5.90

$4.90

Rotary hoe (2x)

$3.80

$2.20

Row cultivate (2x)

$5.40

$4.80

$33.70

$29.60

32,200

$2.25

$72.45

3,105

$0.022

$68.31

Crop insurance

$11.00

Misc. expenses

$10.00

$7.40

TOTAL MACHINERY COSTS
Seed (price per 1,000 seeds)
Fertilization (dry chicken manure)

Interest on preharvest variable cost (8 months @ 5.15%)
HARVEST

QUANTITY

FIXED COST

VARIABLE COST

YOUR ESTIMATE

$13.30

$6.90

Haul

$6.73

$5.97

Dry

$8.25

$31.35

Handle

$2.75

$3.06

$30.44

$43.47

$14.00

$19.74

Combine

TOTAL HARVEST COSTS
Labor (hours per acre)

1.41

Land (cash rent equivalent)

$219.00

Total costs

$302.88

$242.23

$1.98

$1.58

$1,257.17

$954.30

Return to land, labor, and management

$1,193.04

Return to land and management

$1,173.30

$954.30

Total costs per bushel
Returns over variable cost
Returns over total cost

Return to management

FFED 0027 | Organic Crop Production Enterprise Budgets

Organic Soybean Budget (2018)
RECEIPTS

QUANTITY

$/UNIT

YOUR ESTIMATE

Organic soybean sales (cleaned)

36 bushels

$19.90

$716.40

Organic soybean sales (screened)

4 bushels

$18.10

$72.40

$788.80

TOTAL RECEIPTS

40 bushels

PREHARVEST

QUANTITY

FIXED COST VARIABLE COST

YOUR ESTIMATE

Fall – disk stalks

$4.70

$3.50

Fall – plant rye

$4.60

$4.10

Disk rye (2x)

$9.40

$7.00

Field cultivate

$2.70

$2.80

Plant

$5.90

$4.90

Rotary hoe (2x)

$3.80

$2.20

Row cultivate (2x)

$5.40

$4.80

$36.50

$29.30

1.0

$37.00

1.25

$19.00

$23.75

Crop insurance

$8.90

Misc. expenses

$10.00

$4.21

TOTAL MACHINERY COSTS
Soybean seed (price per bushel)
Rye seed (price per bushel)

Interest on preharvest variable cost (8 months @ 5.15%)
HARVEST

QUANTITY

FIXED COST VARIABLE COST

YOUR ESTIMATE

Combine

$8.50

$4.20

Haul

$1.76

$1.56

Handle

$0.72

$0.80

$10.98

$6.56

$14.00

$29.68

TOTAL HARVEST COSTS
Labor (hours per acre)

2.12

Land (cash rent equivalent)

$219.00

Total costs

$296.16

$119.72

$7.40

$2.99

Returns over variable cost

$669.08

Returns over total cost

$372.92

Return to land, labor, and management

$621.60

Return to land and management

$591.92

Return to management

$372.92

Total costs per bushel

TOTAL

FFED 0027 | Organic Crop Production Enterprise Budgets

Organic Oat-Alfalfa Budget (2018)
RECEIPTS
Organic oat sales

QUANTITY

$/UNIT

TOTAL

YOUR ESTIMATE

80 bushels

$4.30

$344.00

Straw sales

1.0 ton

$105.00

Organic alfalfa sales

1.0 ton

$150.00

$599.00

TOTAL RECEIPTS

40 bushels

PREHARVEST

QUANTITY

FIXED COST VARIABLE COST

YOUR ESTIMATE

Field cultivate

$2.70

$2.80

Harrow

$2.10

$1.50

Drill oats

$4.60

$4.10

Cultipack

$2.70

$2.40

$12.10

$10.80

TOTAL MACHINERY COSTS
Oat seed (unit price per bushel)

2.5

$10.00

$25.00

Alfalfa mix (unit price per pound)

16.0

$4.85

$77.60

$0.00

$10.00

$3.58

Crop insurance
Miscellanous expenses
Interest on preharvest variable cost (8 months @ 5.15%)
One half of establishment costs
HARVEST

$6.05
QUANTITY

$63.49

FIXED COST VARIABLE COST

YOUR ESTIMATE

Combine

$7.60

$3.20

Haul oats

$3.52

$3.12

Handle oats

$1.44

$1.60

Baled oat straw (large round)

$8.20

$5.30

Haul oat straw

$1.93

$3.07

Mowed alfalfa mix

$5.50

$4.40

Raked alfalfa mix

$ 3.20

$2.00

Baled alfalfa mix (large round)

$8.20

$5.30

Haul alfalfa mix

$1.93

$3.70

$41.52

$31.06

$14.00

$16.52

TOTAL HARVEST COSTS
Labor (hours per acre)

1.18

Land (cash rent equivalent)

$219.00

Total costs

$283.09

$
$94.55

Returns over variable cost

$504.45

Returns over total cost

$221.36

Return to land, labor, and management

$456.88

Return to land and management

$440.36

Return to management

$221.36

FFED 0027 | Organic Crop Production Enterprise Budgets

Organic Alfalfa Budget (2018)
RECEIPTS

QUANTITY

$/UNIT

YOUR ESTIMATE

Organic alfalfa sales

4.5 tons

$175.00

$787.50

TOTAL RECEIPTS

4.5 tons

$175.00

$787.50

PREHARVEST

QUANTITY

One half of establishment costs

FIXED COST

$6.05

Crop insurance
Miscellaneous expenses
Interest on preharvest variable costs (6 months @ 5.15%)
HARVEST

QUANTITY

FIXED COST

VARIABLE COST

YOUR ESTIMATE

$63.49

$0.00

$10.00

$2.12

VARIABLE COST

YOUR ESTIMATE

Mowed (3x)

$16.50

$13.20

Raked (3x)

$9.60

$6.00

$24.60

$15.90

$8.69

$13.82

$59.39

$48.92

$14.00

$15.96

Baled (3x) large round
Hauled (3x)
TOTAL HARVEST COSTS
Labor (hours per acre)

TOTAL

1.14

Land (cash rent equivalent)

$219.00

Total costs

$300.40

$
$124.54

Returns over variable cost

$662.96

Returns over total cost

$362.96

Return to land, labor, and management

$597.53

Return to land and management

$581.57

Return to management

$362.57

FFED 0027 | Organic Crop Production Enterprise Budgets

Estimated Organic Crop Production Costs in Iowa, 2010-2018*
2010

2011

2012

2013

2014

2015

2016

2017

2018

$122.27

$153.44

$148.69

$157.46

$146.63

$131.77

$124.05

$137.20

151.57

179.40

201.25

192.17

172.04

179.86

164.22

136.05

140.76

Labor

15.51

16.36

16.50

17.27

18.33

19.74

Land

195.00

215.00

258.00

276.00

287.00

273.00

266.00

230.00

219.00

Total cost per acre

518.95

599.03

665.97

676.70

672.64

649.24

609.81

535.19

545.10

Assumed yield

153 bu

$3.39

$3.92

$4.35

$4.42

$4.40

$4.24

$3.99

$3.50

$3.56

$276.65

$1,068.67

$1,552.53

$1,205.20

$1,163.36

$1,033.76

$767.19

$780.61

$954.30

$71.10

$82.80

$89.88

$96.04

$89.58

$85.52

$81.22

$83.34

Seed, chemicals, etc.

50.00

44.88

45.13

56.75

62.70

61.80

59.90

58.80

60.75

Labor

23.32

24.59

24.80

25.97

27.56

29.68

Land

195.00

215.00

258.00

276.00

287.00

273.00

266.00

230.00

219.00

Total cost per acre

363.32

390.20

444.50

476.48

500.69

474.51

460.31

417.89

415.88

Assumed yield

40 bu

Total cost per bushel

$9.08

$9.75

$11.11

$11.91

$12.52

$11.86

$11.51

$10.45

$10.40

$422.28

$437.80

$637.50

$655.52

$654.71

$506.49

$346.29

$346.91

$372.92

$62.77

$58.63

$58.60

$61.32

$67.93

$72.58

$74.01

$73.61

$69.54

Harvest machinery

64.50

83.90

92.56

95.38

88.98

85.12

70.92

72.58

Labor

12.98

13.69

13.81

14.46

15.34

16.52

Land

195.00

215.00

258.00

276.00

287.00

273.00

266.00

230.00

219.00

Total cost per acre

335.25

371.22

422.97

444.34

465.65

449.90

440.47

389.87

377.64

80 bu

$127.76

$309.79

$394.03

$383.67

$223.36

$153.11

$64.53

$154.13

$221.36

CORN
Machinery
Seed, chemicals, etc.

Total cost per bushel
Return to management
SOYBEANS
Machinery

Return to management
OATS-ALFALFA
One half of est. costs

Assumed yield
Return to management

ALFALFA HAY, ANNUAL PRODUCTION, LARGE ROUND BALES
One half of established costs

$62.77

$58.63

$58.60

$61.32

$67.93

$72.58

$74.01

$73.61

$69.54

Harvest machinery

80.25

119.70

130.88

134.70

125.67

119.43

105.63

108.30

Labor

12.54

13.22

13.34

13.97

14.82

15.96

Land

195.00

215.00

258.00

276.00

287.00

273.00

266.00

230.00

219.00

Total cost per acre

361.73

417.42

471.59

492.89

516.25

498.00

486.27

436.20

424.93

Assumed yield

4.5 ton

Total cost per ton

$80.38

$92.76

$104.80

$109.53

$114.72

$110.67

$108.06

$96.93

$94.43

$290.78

$392.59

$720.91

$564.62

$293.76

$154.51

$98.73

$306.30

$362.57

Return to management

*Input costs come from annual updates of Estimated Costs of Crop Production, FM 1712, Ames: Iowa State University Extension and Outreach.
Updated by Craig Chase, program manager, ISU Extension and Outreach Farm, Food and Enterprise Development Program; Kathleen Delate, Iowa State professor of
agronomy and horticulture; and Olivia Hanlon, undergraduate research assistant. Last revision by Craig Chase, Alice Topaloff, and Kathleen Delate, FM 1876, 2016.
Iowa State University Extension and Outreach does not discriminate on the basis of age, disability, ethnicity, gender identity, genetic information, marital status, national
origin, pregnancy, race, color, religion, sex, sexual orientation, socioeconomic status, or status as a U.S. veteran, or other protected classes. (Not all prohibited bases
apply to all programs.) Inquiries regarding non-discrimination policies may be directed to the Diversity Advisor, 2150 Beardshear Hall, 515 Morrill Road, Ames, Iowa 50011,
515-294-1482, extdiversity@iastate.edu. All other inquiries may be directed to 800-262-3804.

FFED 0027 | Organic Crop Production Enterprise Budgets