These budgets are an estimate of the economic costs and returns for organic grain production in North Carolina. The budgets are based on but one set of many possible cultural and management practices that could be used in the production of organic commodity crops. The most common cultural and management practices in North Carolina were used as the basis for the costs and returns shown in the budgets. Specific farm conditions will vary considerably, which affects both cost of production and yields. Organic production may have more variation in yields and price than conventional production systems. These budgets are only intended to be used as a guide for developing costs and returns estimates for your farm specific situation. Visit the NC State Agricultural and Resource Economics website to download and edit interactive versions of these budgets.

Each individual budget includes estimates of gross receipts, variable operating costs, and fixed costs for that crop. They provide estimates of costs and returns for one year for one crop. An enterprise budget for a specific crop cannot account for the effects of various crop rotations, which could greatly affect the production practices, costs and returns. Note also that the fixed costs do not include the costs associated with the transition from conventional farming to certified organic status. Farm overhead costs are considered but not the cost of owning land or paying land rent. The measure of profit is returns to land, management, and risk.

Gross receipts are estimated from expected prices and average yields based on three- to five-year averages. Yields were estimated to be twenty–five percent lower than for conventional production methods of the same crop. This reduction in yields was based on personal observations with producers and industry sources. Price discovery is more difficult for organic production due to the smaller number of buyers and is the greatest contributing factor for gross receipts.

Variable costs are those costs that will change quickly with changes in the level of production. Since most organic grain is not sold at harvest, drying, and storage costs for three months are included in these budgets. The machinery costs are based on average new equipment prices for the year in which the budget was developed. Used equipment has lower ownership costs (depreciation, interest on investment, tax, insurance) but has higher annual repair and maintenance costs. Labor costs depend on the farm situation. Some activities may require extra hired labor with the associated additional expense, while on another farm the activity might be performed by the owner. A labor charge is included in the budget to reflect either the cost of hiring someone to perform the work or the minimum return the owner wants for his or her time.

The fixed costs include machinery and equipment ownership costs. The ownership costs of machinery and equipment are depreciation, interest on loan, taxes, and insurance.

The budgets do not include irrigation. Irrigation costs can vary from $75 to $150 per acre in total cost depending on the number of times required to irrigate and the type of irrigation. In organic grain where corn prices are often around $10 per bushel and soybean prices are often close to $20 per bushel, the yield increases that timely irrigation brings do not take long to pay for themselves. Each grower must take the time to investigate their cost and returns based on the history of their acreage.

Land rent is highly variable and is often higher for cash crop rotations as this is often the best and most sought-after land. Organic land rent will often be higher because there is typically less organic land available for rent. Farmers should estimate organic land rent from their own cost considerations. Each landowner and grower should seek legal guidance when entering into an agreement for rent and pursue written agreements.

1. Total Receipts: $616.50

2. Total Variable Costs: $511.59

3. Income Above Variable Costs: $104.91

4. Total Fixed Costs: $187.85

5. Total Other Costs: $54.74

6. Total Costs: $1,024.64

7. Net Returns to Land, Risk, and Management: -$244.64

* Note: This budget is for planning purposes only and does not include organic transition, land rent, insurance, or irrigation costs.

*Average state yields and prices received are used but farm yields and prices received may vary.

Prepared by: Derek Washburn and Cassie Scanland, Department of Agricultural and Resource Economics, NC State University

1. Total Receipts: $780.00

2. Total Variable Costs: $782.05

3. Income Above Variable Costs: -$2.05

4. Total Fixed Costs: $187.85

5. Total Other Costs: $54.74

6. Total Costs: $1,024.64

7. Net Returns to Land, Risk, and Management: -$244.64

* Note: This budget is for planning purposes only and does not include organic transition, land rent, insurance, or irrigation costs.

*Average state yields and prices received are used but farm yields and prices received may vary.

Prepared by: Derek Washburn and Cassie Scanland, Department of Agricultural and Resource Economics, NC State University

1. Total Receipts: $707.35

2. Total Variable Costs: $536.42

3. Income Above Variable Costs: $170.93

4. Total Fixed Costs: $236.42

5. Total Other Costs: $37.55

6. Total Costs: $810.39

7. Net Returns to Land, Risk, and Management: -$103.04

* Note: This budget is for planning purposes only and does not include organic transition, land rent, insurance, or irrigation costs.

*Average state yields and prices received are used but farm yields and prices received may vary.

Prepared by: Derek Washburn and Cassie Scanland, Department of Agricultural and Resource Economics, NC State University