Farmers' costs going higher again

Grain prices moved higher this year and the costs of growing them are likely to do the same in the year ahead, according to Purdue University estimates.



The 2011 Purdue Crop Cost & Return Guide projects that farmers could see double-digit increases in variable costs, which include fertilizer, seed, pesticides, fuel, machinery and other expenses not related to labor or land rental.
 The guide is available by going online to http://www.agecon.purdue.edu/extension/pubs/index.asp and clicking on "2011 Purdue Crop Guide."



While prices for corn, soybeans and wheat are up from this past spring, farmers will need those higher returns to offset a spike in variable crop production costs, said Bruce Erickson, Purdue's director of cropping systems management and a crop guide contributor.



"For rotational corn, which is most of the corn in Indiana, our estimates show variable costs in 2011 up around 13 percent compared with 2010," Erickson said. "Soybean production costs will be up around 6 percent, and for winter wheat we're estimating that costs will be 13 percent higher. If you grow continuous corn, you can expect to spend about 14 percent more next year."



Much of the projected cost increases are tied to a recent surge in fertilizer prices. An April U.S. Department of Agriculture survey of Illinois retail fertilizer prices — a benchmark for Indiana — reported average per-ton costs of ammonia at $520, diammonium phosphate at $503 and potash at $501. This month those prices are $736, $661 and $526, respectively.