A breakeven price divides the cost of producing a crop or livestock enterprise by the expected number of units produced. For a crop, that means cost per acre divided by expected yield per acre. It can be calculated for operating costs only or for total costs including land, equipment, and overhead.
Knowing breakeven prices helps a farm decide when to price grain, whether a contract offer is attractive, and how much yield risk it can tolerate. Because both costs and yields are estimates, it is worth testing a range of yields rather than relying on a single number.