| Component |
Former
USDA Method |
To
implement American Agricultural Economics Association (AAEA)
Recommendation |
| Seed |
Survey direct cost for
purchased seed, seed technology fees, and costs of seed cleaning,
and opportunity cost of homegrown seed |
Same as USDA method |
| Fertilizer and soil conditioners |
Survey direct cost |
Survey direct cost for
fertilizers. Soil conditioner cost spread over years of useful
life |
| Manure |
Not included |
Estimated nutrient value
(N, P, K) of the quantity of manure applied to the crop |
| Chemicals |
Survey direct cost |
Same as USDA method |
| Custom |
Survey direct costs for
custom fertilizer and chemical application, soil tests, scouting,
land preparation, cultivation, seeding, harvesting, and hauling |
Same as USDA method |
| Fuel, lubrication, electricity |
Engineering formula used
to determine fuel use by type of machine, valued by state fuel
price |
Same as USDA method |
| Replacement |
Estimate of annual capital
requirement necessary to replace machinery over its assumed
ownership period |
Not included--see capital
recovery |
| Nonland capital |
Opportunity cost of the
average amount of capital invested in machinery used on crop |
Not included--see capital
recovery |
| Repairs |
Engineering formula used
to determine annual repair cost based on machine, use, and state
machine price |
Similar to USDA method
but amortizes the annual repair cost over the assumed machine
ownership period |
| Capital recovery |
Not included |
Similar to USDA capital
replacement and nonland capital but includes an interest charge
on unrecovered capital |
| Paid and
unpaid labor
|
Paid=direct cost for
paid and contract labor plus other benefits. Unpaid=unpaid labor
hours times state wage rate for agricultural workers |
Paid=same as USDA method.
Unpaid=unpaid labor hours times estimated opportunity wage rate
of farm operators working off-farm |
| Land rent |
Composite of cash rent and an estimated share
rental value based on landlord returns and costs
|
Cash rental rates using
state rent-to-value estimates to impute a cash rental rate on
share rented and owned land |
| Operating capital |
Opportunity cost of the
investment in total variable cash costs during the growing season |
Opportunity cost of the
investment in total operating costs during the growing season |
| General farm overhead |
Farm cost of utilities,
supplies, maintenance of general use structures, and general
business expense allocated by relative value of production |
Same farm costs as in
USDA method allocated by relative gross margins |
| Taxes and insurance |
Real estate tax, non-real
estate property tax, property/casualty/ liability insurance
allocated by relative value of production |
Non-real estate property
tax and property/casualty/ liability insurance allocated by
relative gross margins |
| Reporting format |
Gross value of production: Primary and secondary
products
Variable costs: Seed, fertilizer, chemicals,
custom, fuel, repairs, ginning, paid labor, purchased water
Fixed costs: General farm overhead, taxes and
insurance, interest
Economic costs: Variable costs, general farm
overhead, taxes and insurance, capital replacement, operating
and nonland capital, land, unpaid labor
Returns: Above cash expenses, residual returns
to management and risk
|
Gross value of production:
Same as USDA method.
Operating costs: Seed, fertilizer, chemicals,
custom, fuel, repairs, purchased water, interest on operating
inputs, ginning
Allocated overhead: Paid and unpaid labor,
capital recovery, land, taxes and insurance, general farm
overhead.
Returns: Above operating costs, above total
costs listed
|
