Earlier this month, the Iowa State University (ISU) Extension Service provided a closer look at the potential costs and returns of organic crop production.
More specifically, the ISU update (“Organic Crop Production Enterprise Budgets“) stated that, “An enterprise budget is an estimate of the costs and returns to produce a product (enterprise). For example, a conventional Iowa corn and soybean producer would be interested in developing both a corn and soybean enterprise budget. Organic growers may have three to six different products they wish to develop budgets for depending upon the number of crops within their rotation. These budgets reflect a four-year rotation of corn, soybeans, oats with alfalfa, and a second year of alfalfa as the crops. Changing the rotation to include a second year of corn after soybeans for example would affect the corn budget described here.
“Why use enterprise budgets? In economic terms, enterprise budgets help to allocate land, labor and capital, which are limited, to the most appropriate use. The most appropriate use is defined by the person in control of the resources and may be used to maximize profits, minimize soil loss, or to achieve other goals.
“The estimated costs and returns illustrated are based on a long-term study located at an Iowa State University research farm in southwestern Iowa.”
The ISU budget summary did note that, “The illustrated budgets are to be used as an indication of what a particular crop could average over time and location. Individual farm results will vary from these numbers based on soil types, location to markets, availability to sources of manure and managerial ability, among other considerations.”
