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Expense
Categories
Land: The average price of an acre of U.S. farmland
is over $1,000. Prime farmland in the Corn Belt can sell for over $3,000
per acre (2000). In the Midwest, cash rental prices for land range from
$10 per acre per year for pasture to over $100 for highly productive cropland.
Machinery: The variety of machines for producing crops
is as great as the variety of crops produced. However, there are certain
“staple” technologies such as tractors and combines that serve
to illustrate the magnitude of investment that modern farmers must make
in machinery.
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Harvest scene in the Corn Belt
- a large
combine quickly unloads grain to a high-
capacity grain cart |
| Source: Daniel R. Ess,
Purdue University |
It is often puzzling to non-farmers to see expensive equipment stored in
sheds and/or sitting idle for months at a time. Why would a farmer invest
$300,000 in a large combine only to use it for four weeks out of the year?
How could a farmer possibly justify spending upwards of $200,000 for a tractor
that is used for little else but tillage? The simple, but important, answer
is TIMELINESS. Crops are biological “products” that produce optimum
yields only when planting and harvest operations can be performed within
relatively small windows of time. For instance, the optimum harvest window
for corn in Eastern Illinois is only 30 days long and for wheat in Kansas
the harvest window is only 10 to 14 days. This requires the use of large
equipment that is used very intensively for relatively short periods of
time.
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