High Production Cost Series, Part 3

The National Corn Growers Association is concerned about the tough financial reality facing many farmers today. While NCGA maintains a persistent focus on driving additional sources of demand for U.S. corn in effort to improve the outlook, it is also analyzing input costs that remain near record highs. This is Part 3 of a three-part series highlighting the financial challenges facing corn farmers and a deeper look at the cost of growing corn.

What Components Are Driving High Production Costs?

Costs are broken into two groups: operating costs and overhead costs. Using USDA averages, each group represents about half of the total production cost for corn. Costs have increased over time across virtually all individual cost categories in both groups.

The total cost to grow corn, including both operating costs and overhead costs, has approximately doubled since 2007. But the $3.90 average farm price expected for 2025 is lower than the $4.20 average farmers received in 2007.

Looking deeper into individual costs, the only decline from 2007 to 2025 is in fuel, lube, and electricity, dropping 18% in that time.

Meanwhile the costs of fertilizer, interest, and general farm overhead increased more than 70%; seed, chemicals, hired labor, taxes and insurance, machinery/equipment, and land more than doubled; and custom services and repairs more than tripled.

For this comparison nominal values are intentionally used to show how the cost environment has approximately doubled despite the expectation for an even lower average farm price.

Overhead Costs Overview

Land costs increased 102% from 2007 to 2025, rising to a projected cost of $196 per acre in 2025.

The opportunity cost of land is the single largest expenditure in the average cost of production estimates. USDA considers this value the potential income foregone by using the land for farming instead of renting it out or pursuing other economic activities. The $196 per acre estimate for 2025 is notably higher than the owned land cost and notably lower than farmland rental rates in major corn-growing states.

Actual land costs vary greatly across farms. If we remove land cost, the remaining average cost to grow corn in 2025 is $701.50 per acre. With an average 188.8 bushel per acre yield, the resulting non-land cost breakeven is $3.72. The September corn contract closed at $3.8375 on August 15, 2025.

Even with the exceptional yields expected and removing land costs from the equation, the current corn price is barely at break even for a farmer with average costs.

Several factors drive farmland values such as interest rates, rental rates, perceived stability of farmland as an investment asset, and government policy that influences farm returns. Another factor is the finite and decreasing supply of land used in farming in the U.S. In 2024, there were 876.5 million acres of land in farms, down 82 million acres, or 9.4%, over the past two decades.

Machinery and equipment costs increased 143% since 2007 to a projected cost of $170 per acre for 2025.

The capital recovery cost figure that USDA uses is an estimate of the cost of replacing the capital investment in machinery and equipment that is used in the annual crop production process, plus interest that the remaining capital could have earned in an alternative use. This figure is based on replacement prices paid for farm machinery each year and represents another major expense item for corn growers.

Machinery and equipment costs have risen due to several factors such as industry production costs, cost of materials and labor, and general market and supply chain issues.

Operating Costs Overview

Three critical inputs make up 73% of the operating costs for growing corn: seed, chemicals and fertilizer. These inputs comprise more than one-third of the total costs to grow corn.

Seed costs per acre have increased 135% since 2007 to a projected cost of $115 per acre for 2025.

Some increase in seed costs can be attributed to improvements in genetics and breeding techniques that have contributed to greater productivity over time. However, the per bushel cost of seed has also nearly doubled. On average, seed costs divide out to $0.33 per bushel for 2007 and $0.61 per bushel for 2025, an 88% increase per bushel. In other words, even with higher yields, seed costs have increased more than is offset by an increase in yield.

Attributing the full value of higher yields to seed costs only results in a small offset in increased seed costs.

Chemical costs increased 117% since 2007 to a projected cost of $53 per acre for 2025.

According to the USDA Agricultural Chemical Use Program data, herbicides account for over 90% of chemical pesticide use on corn acres and average herbicide use per acre is roughly the same as in 2007. But fungicide use has changed; fungicides for corn became widely available in the mid-2000s. USDA data shows fungicide was used on 8% of corn acres in 2010, the first year this figure is available, and 19% of corn acres in 2021, the most recent year available. Given the prevalence of fungal concerns in fields and benefits fungicides provide to corn crops, it's likely fungicide use on corn acres has continued to increase. Based on the Crop Protection Network Fungicide ROI Calculator, twelve corn fungicide options range in price from $19 to $37 per acre, which alone could account for the increase in farm chemical costs since 2007.

Fertilizer costs increased 74% since 2007 to a projected cost of $162 per acre for 2025.

Farmers must sell record amounts of corn to purchase MAP, DAP, UAN 28%, UAN 32% and Urea fertilizer to meet their fertility needs.

Fertilizer makes up 36% of operating costs and 18% of the total cost to grow corn. Higher fertilizer prices hit farm budgets hard given its magnitude as a cost item.

Current retail fertilizer prices are well below the 2022 spike but above the average price level of the previous decade and rising further. In 2025, retail prices for potash and phosphate fertilizers DAP and MAP rose 9-12%, while retail prices for nitrogen fertilizers urea, UAN 28%, and UAN 32% rose 40-43%. High fertilizer prices may be attributed to numerous factors such as tariff uncertainty, ongoing countervailing duties on fertilizers, geopolitical issues, and constrained market flows.

The cost of fertilizer relative to corn is elevating concern. Compared to the 2012-to-2021-decade average price when retail fertilizer prices were fairly stable, current prices are over 50% higher for phosphate fertilizers, and at least 40% higher for nitrogen fertilizers urea, UAN 28% and UAN 32%. Current corn prices are 15% lower than the decade average daily price. Farmers are selling many more bushels of corn to buy the same one ton of fertilizer.

The NCGA Corn Economy report from July 2025 showed costs of fertilizer in the "currency of corn" at or near record high levels, depending on metrics used and fertilizer evaluated. Since then, the numbers have climbed to even higher levels. As of mid-August, it takes about 30% more bushels of corn to buy MAP or DAP compared to the first of the year, and over 50% more bushels of corn to buy UAN 28%, UAN 32%, or urea.

Summary

Corn production costs have roughly doubled since 2007, while the average farm price for corn in 2025 is expected to be lower than in 2007, creating a challenging economic environment for farmers. Both operating and overhead costs contribute equally to total production costs, with notable increases across most categories except fuel and electricity. Previously posted Part 1 and Part 2 evaluated costs relative to prices and breakeven levels for corn, and a look at inflation-adjusted costs and include comparisons to challenging financial periods of the past.