How productive is your farmland? Do you have 200 bushel corn and 65 bushel soybean soil? Or do you have 140 and 40 bushel corn and beans? Your productive potential may be the best indicator of what you should plant in 2008. If you are still working on crop budgets and potential marketing income, consider letting your soil make the choice.

Think about the answers to two questions. What are your overall costs of production for corn and beans? What has the potential to yield better on your farm? Ag economists Gary Schnitkey and Dale Lattz at the University of Illinois projected corn and bean returns for 2008. In short, your crop performance and income for the period of 2004 through 2007 should give you an idea of what to expect. But let’s work through their calculations, which covered high yielding soils in the northern 1/3 of Illinois, the central 1/3 which has both high and moderate yield soils, and the southern 1/3 of Illinois which has lesser productivity. So the wide variation will parallel most Cornbelt farms. Schnitkey and Lattz said, “In most cases, corn-minus-soybean-returns were positive, meaning that corn returns where higher than soybean returns. Only in 2005 did soybean returns exceed corn returns in two cases: central Illinois with low-productivity farmland and southern Illinois.” There is the first hint. In a year with reduced yields, the soybeans provided better returns.

Corn exceeded soybean returns on average for the 4 years by $47 in northern Illinois, $46 on the better central Illinois ground, by $39 on the lesser central Illinois soil, and by $16 in southern Illinois. “In general, corn yields increase more on higher productivity farmland than do soybean yields. This causes corn returns to exceed soybean returns the higher the productivity of the farmland.” If you are wondering about send year corn, the economists calculated a 10 bu. per acre yield drag on corn after corn, and production costs were higher for second year corn because of higher fertilizer requirements.

1) For the better soils in northern Illinois the planting decision was based on a comparison of returns. Operator and land return was $342 for corn after beans, $291 for corn after corn, and $270 for soybeans. The economists concluded that corn was the best choice for profitability on the higher yielding soils.
2) For the better soils in central Illinois, the planting decisions were similar. The return to land and operator for corn after beans was $396, for corn after corn was $344, and for soybeans was $312. “This suggests that planting corn will be more profitable than planting soybeans for the better soils in northern and central Illinois.”
3) For the lesser soils in central Illinois the differences were not as pronounced. The return to land and operator was $323 for corn after beans, $271 for corn after corn, and $291 for soybeans. “This suggests that planting soybeans on farmland that was previously planted to corn will be more profitable than planting corn for farmland with this productivity.”
4) For the lesser quality soils in southern Illinois, the variations changed. The return to land and operator was $226 for corn following beans, $173 for corn following corn, and $232 for soybeans. “This suggests that soybeans will be more profitable.”

If your decision is more corn oriented, Schnitkey and Lattz offer four items for your checklist before you reach the point of no return.
1) Commodity prices will determine the relative profitability given the market volatility, and for every corn price there is a break-even soybean price that will vary by soil productivity.
2) Individual farms may have results different from the averages calculated by the economists. The variability is high as a result of highly variable fertilizer prices.
3) Machinery and power costs were kept static regardless of cropping pattern.
4) The 2008 planting decision will impact 2009, if the yield drag and higher fertilizer costs on second year corn are considered.

While the calculations were made applicable to the specific conditions in Illinois, the trend would be applicable to the rest of the Cornbelt based on comparisons with soil type and productivity.

Summary:
Highly productive soil produces higher returns from corn than from soybeans. As soil productivity declines, returns decline faster for corn than for beans, and beans will become the more productive crop. Use your general results from 2004 through 2007 to help make planting decisions for 2008, if your options are still open. The market price relationship between corn and soybeans will still have an impact.