What is in this article?:
- Farmers' costs going higher again
- Volatile market since 2007
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.
Volatile market since 2007
After years of incremental movement in fertilizer prices, the market has been much more volatile since 2007, Erickson said. "Crop production around the world, and the demand associated with that, still seems to be the primary driver," he said.
"And fertilizer is more and more a world market now. Producing fertilizers is an energy-intensive business, so producers often source outside the U.S., where energy costs can be a fraction of what they are here."
There's not a lot most farmers can do to soften the blow of higher production costs, Erickson said. They can shop around to find the best deal for fertilizer and other crop inputs and buy in bulk and store if they think prices are heading up, he said.
Erickson reiterated that the crop guide contains cost estimates, and that a lot could happen in the market between now and when the 2011 crop is planted. "We offer these estimates to provide a relative benchmark to help farmers, landowners and those working with them some perspective on the economics of producing a crop," Erickson said. "The situation for an individual farm can be much different than this depending on how and when crops were sold, how purchases were made, etcetera. "While costs are back up, most crop producers are managing to stay ahead of the curve. This is in contrast to the situation with livestock producers, though, where an increase in their feed prices further pinches returns. I'm old enough that I remember those long stretches of lean years on the farm, so we'll take this for now and ready ourselves for whatever the future holds."