SMART CUTS: Wheat profits are hard to come by, even with high yields. Cost-cutting is needed, say experts.

How to cut wheat production costs without giving up a bushel

‘Start farming again,’ advises Jochum Wiersma, University of Minnesota Extension small grains agronomist, ‘rather than being an industrial producer of a commodity.’

Jochum Wiersma, University of Minnesota small grains agronomist, says to cut costs in wheat without reducing yields, you should consider whether you really need:

• a seed treatment
• a grass herbicide across every acre
• a fungicide mixed in at the time of weed control
• an insecticide mixed in with your fungicide at the time of your late-season disease control
• a preharvest glyphosate application

“In other words, start farming again, rather than being an industrial producer of a commodity and apply the principles of integrated pest management, rather than just going by calendar date/crop growth stage,” he says.

“The last inputs I would debate the need for are fertilizer (in particular nitrogen) and the late-season fungicides,” he says.

More ideas
Some other areas to consider for cuts include:

Power costs. Power costs include fuel, repairs, leasing, custom work, interest and depreciation. Most are often fixed or overhead costs. “Too many producers have built up higher depreciation costs over the last few years while investing in equipment to help manage taxes. Today they can suffer from those total costs, resulting in excessive depreciation costs per acre,” says Steve Metzger, North Dakota Farm Business Management instructor, Carrington. Central North Dakota farmers participating in the North Dakota Farm Business Management Program had power costs that ranged from $60 per acre on the high-profit fields to $72 per acre on the low-profit fields.

Land rents. “Run the numbers for your own farm and be transparent with your landlords. In many cases, for cash rent to be fair at current grain market levels, rent needs to come down. Many growers are getting substantial reductions for this year. It costs nothing to ask,” says Darren Hefty, of Hefty Seed Co. and a co-host of the AgPhD radio and TV shows.

Labor, machinery. “The more difficult costs to calculate are overhead such as labor, machinery, utilities and farm insurance,” says Betsy Jensen, a Minnesota Farm Business Management instructor at Northland Community College, Thief River Falls. “It is possible to cut overhead costs without impacting yield. It may mean postponing a planned machinery update, or trying to use part-time versus full-time labor. We see a $75-per-acre difference from high to low in overhead expenses on cash-rented wheat. Some farms average $22 per acre in overhead, and others average $97. Overhead is something farms need to do a better job managing, and it makes the whole farm more profitable, not just wheat.”

No-till and livestock
David Koupal, South Dakota Farm and Ranch Business Management instructor, Rapid City, says look to no-till and cattle to improve wheat yields.

“Just recently, I was working on a closeout for the 2016 analysis with a [western South Dakota] client,” he says. “We were reviewing his crop production history and his final breakevens on his wheat fields and noticed a difference.”

No-till had improved the soil’s ability to hold moisture longer in the summer, which increased yields. Also, fields that had a heavy amount of natural cattle manure during the winter months also yielded more.

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