By February, most farmers think they know their cost of production, until spring decisions start testing it. 

Seed quotes come in. 

The operating loan gets finalized. 

Margins start feeling tighter than expected. 

And suddenly, the numbers don’t pencil quite like they did in December. 

That’s usually not because your math is bad, but because a few important economic costs never made it into the equation. And February is the last clean window to catch them before spring decisions are locked in. This isn’t about rebuilding your entire budget or second-guessing last year. It’s about tightening up the numbers that actually drive decisions right now.

Why Cost of Production Matters Now

February is when cost of production stops being theoretical and starts controlling real outcomes.

This is when:

• Operating loans are being finalized
• Seed and input purchases are getting locked in
• Rent and cash flow conversations get real
• Lenders start asking sharper questions

If your cost of production is missing key pieces, it shows up fast, usually as pressure, not clarity. And most of the time, the issue isn’t the big line items. It’s the quiet costs that don’t always hit a checkbook.

Hidden Cost #1: Labor (Including Your Own)

Labor is one of the most common blind spots in farm cost of production. Not because farmers don’t work hard, but because owner and family labor rarely shows up as an expense.

When labor isn’t accounted for:

• Per-acre costs look lower than they really are
• Margins appear stronger than they are
• Marketing and expansion decisions get skewed

A simple way to think about it:

 

If you had to replace yourself tomorrow, what would it cost?

 

That number doesn’t mean you need to pay yourself more today. It just means your operation depends on real labor, and your cost of production should reflect that reality.

Hidden Cost #2: Equipment Depreciation That Sneaks Up on You

It’s easy to think that “paid-for” equipment is free. But equipment always has a cost, whether it shows up this year or later.

Ignoring depreciation can:

• Make tillage or planting passes look cheaper than they are
• Hide the true cost of owning iron versus hiring custom work
• Delay replacement planning until it becomes urgent

Tax depreciation and economic depreciation aren’t the same thing. Even if the tax side is handled, your cost of production still needs to reflect wear, replacement risk, and long-term ownership cost.

Especially in February, when you’re planning how hard equipment will run this season, this number matters.

Hidden Cost #3: Land Opportunity Cost

Land opportunity cost is one of the most misunderstood, and most important, pieces of farm profitability.

Even if you own the land outright, it still carries a cost:

• What return does that asset need to justify its use?
• What could that capital earn elsewhere?
• What does that land need to produce to stay viable long-term?

When land opportunity cost is ignored:

• Profit looks better than it really is
• Rent comparisons get distorted
• Long-term sustainability gets harder to evaluate

This isn’t about changing your land strategy. It’s about understanding what the land actually needs to earn.

What Happens When These Costs Are Missing

When labor, depreciation, and land opportunity cost are missing from your cost of production, the numbers aren’t wrong — they’re incomplete.

That incompleteness shows up as:

• Seed decisions that don’t deliver expected returns
• Lender conversations that feel harder than they should
• Marketing plans that rely on best-case outcomes

Now is when those gaps get exposed, because decisions start stacking up fast.

A Quick Cost of Production Reality Check

Before you lock in spring decisions, ask yourself:

• Does my cost of production include labor — including mine?
• Does it reflect the real cost of running and replacing equipment?
• Does land contribute a realistic return expectation?

You don’t need perfect answers. You just need honest ones.

Why Clear Cost of Production Makes Everything Else Easier

When your cost of production is solid:

• Lender conversations are cleaner
• Seed and input ROI comparisons make more sense
• Marketing decisions feel less like guesses
• Stress-testing scenarios becomes possible

Clear numbers don’t eliminate risk, but they reduce surprises.

Turning Cost of Production Into a Usable Planning Tool

roots is built to help farmers:

• Capture true cost of production in one place
• See per-acre impact clearly
• Carry accurate numbers into forecasting and scenario planning

Instead of rebuilding spreadsheets every winter, your numbers become something you can actually use, from February planning through harvest decisions.

If you want to see how cost of production connects directly to forecasting, cash flow, and lender conversations, you can learn more about roots or sign up to receive an invitation to the beta.

Before You Lock in Spring Decisions

February is your last clean chance to tighten cost of production before momentum takes over. A few adjustments now can make the rest of the year feel a lot more manageable, and a lot more confident.