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USDA has estimated annual production costs and returns and published accounts
for major field crop and livestock enterprises since 1975. These cost and return
accounts are "historical" accounts based on the actual costs incurred by producers.
In this way, they differ from "projected" accounts, often referred to as enterprise
budgets, produced by most land grant universities to assist in farm planning.
The costs and returns of all participants in the production process—including
farm operators, landlords, contractors, and contractees—are included in the
account. For this reason, the accounts are often referred to as "sector accounts,"
representing the costs of and returns to all resources used in the production
sector of each commodity.
The annual estimates are based on producer surveys
conducted about every 4-8 years for each commodity and updated each year with
estimates of annual price, acreage, and production changes. This essentially
fixes the
technology
that underlies the accounts to that used in the survey year. The most recent
cost and return estimates for each commodity are based on surveys conducted
in:
- 2005 for corn, oats, and milk
- 2004 for hogs, wheat, and peanuts
- 2003 for barley, cotton, and grain sorghum
- 2002 for soybeans
- 2000 for rice and sugar beets
- 1996 for cow-calf
Estimates made in the survey
year should be regarded as the most reliable because they reflect both prices
and technologies used on the commodity. The reliability of estimates in nonsurvey
years likely varies for each commodity by the degree of technical and structural
change that has occurred since the last survey. Commodity-specific surveys as
part of the annual Agricultural Resource Management Survey
(ARMS) have been used to collect the data since 1996. Data in prior years
were collected as part of the annual Farm Costs and Returns Survey (FCRS).
The theoretical basis and accounting methods
used for the most recent estimates of commodity costs and returns
conform with standards recommended by the
American Agricultural Economics
Association (AAEA) Task
Force on Commodity Costs and Returns. In addition, accounts
published in this format
are presented using ERS
Farm Resource Regions, which provide a consistent regional
delineation across the commodities.
The accounts include only costs incurred
in the production of each crop commodity, excluding costs for marketing and storage.
Returns above operating and total costs are computed by valuing production at
the end of the production period, using a harvest-period price. However, producers
often delay sales and store commodities with the expectation that the price in
later months will exceed the harvest-period price plus the costs associated with
carrying the crop inventory. This means that the estimates of returns above operating
and total costs likely understate those actually received by producers. Marketing
costs and returns are included in the livestock accounts where production is typically
not stored for a significant period before being marketed. The estimated returns
for the crop commodities also exclude marketing loan benefits, which have been
substantial for several commodities during years of low crop prices.
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