By Joana Colussi, Nick Paulson, and Gary Schnitkey, Department of Agricultural and Consumer Economics, University of Illinois and Carl Zulauf, Department of Agricultural, Environmental and Development Economics, Ohio State University
The direct costs associated with corn production in Mato Grosso have increased since 2016, consistent with the direct costs of corn production in Illinois (see farmdoc daily, September 26, 2023). Direct costs in Brazil surged to record levels for the 2022/2023 crop season, but projections indicate a decline for the 2023/2024 crop season, which is also in line with cost projections for Illinois. Our first article of 2024 compares trends in the direct costs associated with corn production in major agricultural regions of Brazil and the United States, the world’s largest corn exporters.
On a per acre basis, direct costs for corn have been higher in the United States relative to Brazil. However, adjusting for differences in corn yields by examining costs on a per bushel basis illustrates a cost advantage for Illinois producers that has been primarily driven by higher fertilizer costs in Mato Grosso.
Data and Procedures
The data in this article are from the Illinois Farm Business Farm Management (FBFM) Association and the Mato Grosso Institute of Agricultural Economics (IMEA). In addition, average corn yields for Mato Grosso used to calculate costs on a per bushel basis come from the National Supply Company (Conab), Brazil’s agency for food supply and statistics. Direct costs in Illinois and Mato Grosso include the cost of production inputs, such as fertilizers, seeds, pesticides (herbicides, insecticides, fungicides), and costs associated with drying, storage, and crop insurance.
Data from Mato Grosso correspond to the second corn crop, known as safrinha, planted in January and February immediately after the first-season soybean harvest. Currently, the safrinha crop accounts for about 75% of total corn production in Brazil. Brazil contains two distinct areas for the production of corn: the traditional Southern and Southeastern agricultural producing regions and the Center-West agricultural region, mainly the State of Mato Grosso, the largest producer of corn in Brazil.
Total Direct Costs
Total direct costs for the second crop in Mato Grosso have increased from $220 in 2016 to $269 per acre in 2023, an average annual growth rate of 2.9%. Meanwhile, from 2016 to 2023, total direct costs for corn production in central Illinois have increased from $380 to $579 per acre, an average annual growth rate of 6.2% (see Figure 1a). Total direct costs are projected to decline in central Illinois for the 2024 crop year, led by projected declines in fertilizer costs from 2023. In contrast, total direct costs are projected to increase by 3% for the 2024 corn crop in Mato Grosso.
Overall, the direct costs to produce corn in Mato Gross have been lower on a per acre basis than in Illinois since 2016. However, Brazil does not achieve the same corn yields as the United States (see farmdoc daily, January 12, 2022). For example, the average corn yields from 2016 to 2022 in Mato Grosso and central Illinois were 93 and 224 bushels per acre, respectively. Figure 1b reports the total direct cost figures for both regions on a dollar per bushel basis. By this measure, the total direct costs for corn production in both regions has been much more comparable with central Illinois averaging $1.98/bu and Mato Grosso averaging $2.24/bu.
To read entire report, Click Here
