How Much will Dropping Fuel Prices Affect Your Bottom Line?

How Much will Dropping Fuel Prices Affect Your Bottom Line?

January 20, 2015

For one common pivot-irrigated corn scenario, a change in diesel fuel from $3.25 per gallon to $2.35 per gallon would drop the cash cost of production from $2.98/bu to $2.84/bu, said Nebraska Extension Farm Management Specialist Roger Wilson. That's a savings of 14 cents per bushel or 4.7%.

Wilson is one of the editors of the 2015 Nebraska Crop Budgets, a group of 69 budgets published in both PDF and Excel formats.  To estimate the effect of lower diesel prices in this example, Wilson adjusted the fuel costs used in Budget 27.  The change in fuel price would drop the total cost per bushel from $4.70 to $4.56. For a 1,000-acre farm yielding an average 200 bu/ac, the savings would add up to $28,000.

To see how much lower fuel prices could affect your bottom line, Wilson recommended downloading the Excel budget that most closely matches your operation. To change the price of fuel in the spreadsheet, move the cursor to one of the tabs near the bottom of the page and click the right button on the mouse. This will bring up a menu with an option to "Unhide." Clicking the "Unhide" option will bring up a menu showing the hidden tabs. The price of fuel is entered in the "General Variables" tab. Clicking "OK" when it is highlighted will reveal this tab. The price of fuel is entered in Cell B5.

Wilson said the process for unhiding a tab is illustrated in the video on the Crop Budgets web page. This process can also be used to make other modifications to develop a budget to more closely reflect your operation.

The budget used for this illustration was for pivot-irrigated, continuous corn with SmartStax technology, RIB complete, with an actual yield of 225 bu/ac. The Crop Budgets website features 14 other corn budgets as well as budgets for alfalfa, dry beans, grain sorghum, grass, millet, oats, pastures, peas, sorghum-sudan, soybeans, sugarbeets, sunflowers, wheat, and cover crops.

Lisa Jasa
CropWatch Editor