Top Five Major U.S. Row-Crops Experience Negative Returns

WASHINGTON, DC – Producers of the top five field crops in the United States have struggled to cover total costs of production over the past decade. The Economic Research Service’s (ERS) Commodity Costs and Returns product estimates this gap or surplus in the calculation of the value of production less total costs, also known as net returns.

Total costs comprise operating costs, which include expenses such as fertilizer, seed, and chemicals, and allocated overhead (economic) costs, which include unpaid labor, depreciation, land costs, and other opportunity costs. Although revenue from selling crops can typically cover operating costs each year, net returns have often been negative. This suggests that, in some cases, allocated overhead costs are not covered.

Corn’s net returns increased early in the decade, primarily due to a boom in the production of corn-based ethanol. Corn yields and acreage remained high after the boom (for the most planted crop), leading, in part, to lower prices and returns over time. Net returns for soybeans (the second most-planted crop) shadowed those for corn during the ethanol boom, remaining higher than those for corn up until 2018. The third most planted crop, wheat, saw prices and returns decline, due to strong international competition. Cotton, the fourth most-planted crop in the U.S., and sorghum (5th most planted) also experienced negative returns.
(SOURCE: Economic Research Service)