Examining the Competitiveness of Corn Production in Different Regions
Examining the competitiveness of corn production in different regions of the world is often difficult due to lack of comparable data and agreement regarding what needs to be measured. To be useful, international data needs to be expressed in common production units and converted to a common currency. Also, production and cost measures need to be consistently defined across production regions or farms.
This paper examines the competitiveness of corn production for important international corn regions using 2018 to 2022 data from the agri benchmark network. An earlier paper examined international benchmarks for the 2015 to 2019 period (Langemeier, 2021). The agri benchmark network collects data on beef, cash crops, dairy, pigs and poultry, horticulture, and organic products. There were 20 countries with corn, soybean, and/or wheat enterprise data for 2022 represented in the cash crop network. The agri benchmark concept of typical farms was developed to understand and compare current farm production systems around the world. Participant countries follow a standard procedure to create typical farms that are representative of national farm output shares, and categorized by production system or combination of enterprises and structural features. Costs and revenues are converted to U.S. dollars so that comparisons can be readily made. Data from six typical farms with corn enterprise data from Argentina, Brazil, Canada, Ukraine, and United States were used in this paper. It is important to note that corn enterprise data is collected from other countries. These five countries were selected to simplify the illustration and discussion.
Corn Yields
Although yield is only a partial gauge of performance, it reflects the available production technology across farms. Average corn yield for the farms in 2018 to 2022 was 9.34 metric tons per hectare (148.8 bushels per acre). Average farm yields ranged from approximately 6.57 metric tons per hectare for the Brazilian farm (104.7 bushels per acre) to 12.73 metric tons per hectare for the Iowa farm (202.8 bushels per acre). Figure 1 illustrates average corn yield for each typical farm. Both of the U.S. farms had average corn yields above 11.6 metric tons per hectare (185 bushels per acre).
Input Cost Shares
Due to differences in technology adoption, input prices, fertility levels, efficiency of farm operators, trade policy restrictions, exchange rate effects, and labor and capital market constraints, input use varies across corn farms. Figure 2 presents the average input cost shares for each farm. Cost shares were broken down into three major categories: direct costs, operating costs, and overhead costs. Direct costs included seed, fertilizer, crop protection, crop insurance, and interest on these cost items. Operating cost included labor, machinery depreciation and interest, fuel, and repairs. Overhead cost included land, building depreciation and interest, property taxes, general insurance, and miscellaneous cost.
The average input cost shares were 45.7 percent for direct cost, 24.4 percent for operating cost, and 29.9 percent for overhead cost. The typical farms in Argentina and the United States have below average cost shares for direct cost. The typical farm in Argentina and Indiana had below average cost shares for operating cost. Labor costs as a proportion of total costs were relatively higher for the typical farm in the Ukraine. Overhead costs as a proportion of total costs were relatively higher in Argentina and the United States. The relatively large cost share for overhead cost in the U.S. reflects our relatively high land cost.
Revenue and Cost
Figure 3 presents average gross revenue and cost for each typical farm. Gross revenue and cost are reported as U.S. dollars per hectare. It is obvious from figure 3 that gross revenue per hectare is substantially higher for the two U.S. farms. However, cost is also substantially higher for these two farms. All of the typical farms exhibited economic profit during the five-year period. Average economic profit ranged from $84 per hectare in Brazil to $399 per hectare in Canada. Examining individual years, the typical farm in Argentina had an economic loss in 2020; the typical farm in Brazil had economic losses in 2018, 2019, and 2021; the typical farm in the Ukraine had an economic loss in 2022; the typical farm in Iowa had economic losses in 2018 and 2020; and the typical farm in Indiana had economic losses in 2018 and 2019.
Conclusions
This paper examined yield, gross revenue, and cost for farms in the agri benchmark network from Argentina, Brazil, Canada, the Ukraine, and the United States with corn enterprise data. Yield, gross revenue, and cost were substantially higher for the U.S. farms. In general, the 2018 to 2022 period was a profitable period for corn production with each of the typical farms illustrated in this article exhibiting a positive average economic profit. A subsequent article will examine the relative profitability of soybean production during the same period for the six typical farms discussed in this article.
References
- agri benchmark. http://www.agribenchmark.org/home.html. Accessed on December 27, 2023.
- Langemeier, M. “International Benchmarks for Corn Production.” Center for Commercial Agriculture, Department of Agricultural Economics, Purdue University, June 4, 2021.
SDGs, Targets, and Indicators
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SDG 2: Zero Hunger
- Target 2.3: By 2030, double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous peoples, family farmers, pastoralists, and fishers, including through secure and equal access to land, other productive resources and inputs, knowledge, financial services, markets, and opportunities for value addition and non-farm employment.
- Indicator 2.3.1: Volume of production per labor unit by classes of farming/pastoral/forestry enterprise size.
- Indicator 2.3.2: Average income of small-scale food producers, by sex and indigenous status.
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SDG 8: Decent Work and Economic Growth
- Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.
- Indicator 8.5.1: Average hourly earnings of female and male employees, by occupation, age group, and persons with disabilities.
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SDG 12: Responsible Consumption and Production
- Target 12.3: By 2030, halve per capita global food waste at the retail and consumer levels and reduce food losses along production and supply chains, including post-harvest losses.
- Indicator 12.3.1: Food loss index.
- Indicator 12.3.2: Food waste index.
Table: SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 2: Zero Hunger | Target 2.3: By 2030, double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous peoples, family farmers, pastoralists, and fishers, including through secure and equal access to land, other productive resources and inputs, knowledge, financial services, markets, and opportunities for value addition and non-farm employment. | Indicator 2.3.1: Volume of production per labor unit by classes of farming/pastoral/forestry enterprise size. Indicator 2.3.2: Average income of small-scale food producers, by sex and indigenous status. |
| SDG 8: Decent Work and Economic Growth | Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value. | Indicator 8.5.1: Average hourly earnings of female and male employees, by occupation, age group, and persons with disabilities. |
| SDG 12: Responsible Consumption and Production | Target 12.3: By 2030, halve per capita global food waste at the retail and consumer levels and reduce food losses along production and supply chains, including post-harvest losses. | Indicator 12.3.1: Food loss index. Indicator 12.3.2: Food waste index. |
Analysis
The issues highlighted in the article are related to the competitiveness of corn production in different regions of the world. Based on the content of the article, the following SDGs, targets, and indicators can be identified:
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SDG 2: Zero Hunger
The article discusses corn production and its importance for food production. SDG 2 aims to achieve zero hunger and improve agricultural productivity. Target 2.3 specifically focuses on doubling the agricultural productivity and incomes of small-scale food producers. The indicators 2.3.1 (volume of production per labor unit) and 2.3.2 (average income of small-scale food producers) are relevant to measure progress towards this target.
-
SDG 8: Decent Work and Economic Growth
The article mentions the economic profit and costs associated with corn production. SDG 8 aims to achieve decent work and economic growth. Target 8.5 focuses on full and productive employment and decent work for all individuals. The indicator 8.5.1 (average hourly earnings of employees) can be used to measure progress towards this target.
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SDG 12: Responsible Consumption and Production
The article discusses the input costs and efficiency of corn farms. SDG 12 aims to promote responsible consumption and production. Target 12.3 specifically focuses on reducing food losses along production and supply chains. The indicators 12.3.1 (food loss index) and 12.3.2 (food waste index) can be used to measure progress towards this target.
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Fuente: ag.purdue.edu
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