Conceptually, crop cash receipts may be based on either 

 the season-average price received by farmers over the 

 marketing period or the harvest-period price. For 

 consistency, an analyst using season-average price would 

 need to include storage and marketing costs in the budget. 

 Prices used for crops in the COP accounts are average 

 prices received by farmers in the harvest months. Data on 

 marketing patterns and methods of storing and selling 

 crops are not currently available. The COP budgets 

 exclude any additional revenues the farmer may have 

 earned by storing the crop for later sales as well as 

 associated costs of storage. 



Estimates of total returns omit direct Government price- 

 support payments, except for wool. In the peanut, sugar, 

 and milk programs, the Government supports the product 

 price through direct market intervention. Estimated value 

 of production, therefore, reflects the combined market 

 price and masks Government payments. In contrast, most 

 crop price-support programs are voluntary and contain 

 special compliance provisions. When using cost and return 

 information to judge whether support prices will 

 encourage or maintain production at adequate levels, one 

 should exclude both program payments and compliance 

 costs. 



Cash Expenses 



Cash expenses consist of both variable expenditures (those 

 incurred only if production takes place in a given year) and 

 fixed expenditures. Fixed expenditures include taxes, 

 insurance, overhead, and interest, for which the operator 

 or landlord would be responsible whether or not a specific 

 commodity is produced. 



Variable cash expenses include such items as seed, 

 fertilizer, lime and chemicals, custom operations, hired 

 labor, fuel and lubrication, repairs, drying, ginning, 

 purchased irrigation water, hired management fees, feed, 

 and livestock hauling. 



Data on seed quantities used per acre come from both 

 Agricultural Statistics (S) and COP surveys. Seed prices 

 include both purchased hybrid varieties and home- 

 produced seed. For a crop like corn, which uses mostly 

 hybrid seed, ERS takes purchased seed prices directly 

 from State seed price estimates in Agricultural Prices {11). 

 Estimated seed prices are used for home-produced seed; 

 these prices follow the previous season's average prices 

 plus an allowance for cleaning and treatment. Estimates 

 of the share of seed purchased and produced at home 

 come from either Field Crop Production: Disposition and 

 Value {14) or COP survey data. Agricultural Prices {11) 

 provides data on market prices for seed. 



Fertilizer quantities for corn, cotton, soybeans, and wheat 

 come from the Agricultural Resources Situation and 

 Outlook: Inputs {4) report, which provides estimates of the 

 quantity of fertilizer used by nutrient (nitrogen, phosphate, 

 and potash) in the major producing regions. For other 

 crops, COP surveys provide data on fertilizer, lime, and 

 gypsum use. Prices for all fertilizer materials come from 

 Agricu Itu ral Prices {11). 



COP surveys provide pesticide cost data, although 

 individually identified pesticides are not listed because of 

 the numerous chemical compounds and trade names. In 

 nonsurvey years, pesticide costs are adjusted to follow the 

 index of prices paid for farm chemicals listed in 

 Agricultural Prices {11), a procedure that excludes annual 

 changes in quantity. Variables affecting pesticide use and 

 costs such as new chemicals, insect infestations, disease 

 outbreaks, unusual weed problems, or rotation changes 

 cannot be measured in nonsurvey years. However, 

 because COP surveys give reliable estimates at regional 

 and national levels, we assume that changes in localized 

 pesticide use will not substantially affect aggregate figures. 



Custom operators and farmers alike apply pesticides. 

 They often combine pesticide application with another 

 farm machinery operation. Some dealers sell pesticides 

 and then rent applicators to farmers. Many custom 

 operators charge a flat rate, but do not provide a cost 

 breakdown between application and materials applied. 

 Cost estimates for custom services come from COP 

 surveys supplemented by State information, when 

 available. ERS updates these rates annually using a farm 

 services and rent index published by NASS and custom 

 rate reports from individual States. 



These cash expenses are relatively easy to estimate, but the 

 procedure for calculating the costs of owning and 

 operating machinery and equipment is more complex 

 because each farm has different types of machinery and 

 equipment of varying ages and sizes. Most farms produce 

 more than one commodity. Thus, any allocation of 

 machinery costs among commodities must assess the 

 relative use of machinery for each commodity. 



COP estimates rely on the COP survey data for machine 

 use, including size, type, and number of passes over the 

 field. The COP surveys provide information that helps 

 create a State or regional machinery complement that ma\ 

 contain up to 100 machines. Surveys also provide an 

 indicator of the average number and size of machines 

 necessary to produce a specific crop. ERS specifies the 

 type of fuel used, age of machine when purchased, length 

 of life, total hours of annual use, and list and purchase 

 prices. 



