URBANA, Ill. — Corn and soybean growers in Illinois will see non-land costs take a big leap next year, pushing the break-even point for farm revenue way above the historical average.

According to a study by Gary Schnitkey, a University of Illinois extension farm financial management specialist, non-land costs for corn will go up more than $40 per acre in 2008 compared with this year, in many cases raising the break-even point to $3 per bushel.

For soybeans, the projected non-land cost increase will be $16-$18 per acre, with a break-even point of more than $8 per bushel.

Surging fertilizer and seed costs are behind most of the increase, and mitigating the effects of it could be a challenge, Schnitkey said. “There are no really good options on the crop cost side of it,” he said. “But we do find that farms that tend to control their costs are the ones that are more profitable over time. This is the year to look at every expense and make sure it gives a return.

“For corn, there are two parts causing (the increase). Nitrogen and anhydrous prices are related to natural gas prices, which have gone up a lot, and the price of dry fertilizers – phosphorous and anhydrous – has gone up due to supply problems.”

Northern and central Illinois will see the biggest increases, since farmers in those regions apply more fertilizer, but costs are going up for farmers across the board, both in the state and the nation, Schnitkey said. For northern Illinois, the cost for raising one acre of corn is estimated to reach $380 per acre next year, up $42 per acre from 2007, which would lead to a break-even point of $2.13 per bushel, not including land costs and assuming a yield of 178 bushels per acre.

In comparison, the break-even point to cover non-land costs was $1.82 per bushel this year and $1.40 per bushel in 2003.

In central Illinois, non-land costs for corn are projected to reach $364 per acre for high-productivity land and $366 per acre for low-productivity land. For southern Illinois, the cost is estimated at $370 per acre. When land costs are included, however, the cost of raising one acre of corn in northern and central Illinois could range from the mid-$500 to more than $600 for farms with high cash rents.

Spiking fertilizer prices are also the main driver behind the higher non-land costs for soybeans, although the cost of raising soybeans hasn’t increased as much as that of corn. In northern Illinois, the non-land cost of raising soybeans is projected to increase to $228 per acre in 2008, up from $210 this year. For central Illinois, non-land costs are estimated at $215 per acre, and for southern Illinois the figure is $224.

When land costs are included, the cost of growing soybeans in Illinois will be close to $400 per acre, and in the mid-$400 per-acre range for farms with above-average costs or higher cash rents.

The break-even point to cover non-land costs for soybeans has varied from year to year due to yield variability, but for 2008 it is projected to be $4.47 per bushel, compared with $3.96 in 2007 and $4.60 in 2003. When land costs are included, the break-even revenue for cash-rented land could total as much as $7.90-$8.88 per bushel, assuming a yield of 51 bushels per acre.

Schnitkey said non-land costs have been steadily on the rise since 2003, although they were partially offset by the climb in corn and soybean prices that began during the latter part of 2006.

“In 2003, we began to see energy costs increase. Crude oil and natural gas have driven up fertilizer and other field costs. Genetics are also costing more, and we’re seeing the triple stacks and biotechnology impact (non-land) costs.”

Given the higher commodity prices, Schnitkey said the outlook for 2008 farm income is still bright, even though the study doesn’t take into account the potential dramatic spike in crude oil prices that’s been the subject of many newscasts lately.

“It still looks like a fairly good income year, if prices stay where they are currently. But any price decline will cause much lower farm income,” he said.

The study was based on data from local Farm Business Farm Management Associations in Illinois.