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Crops becoming more expensive to produce as supplies see price hikes

Posted at 6:54 PM, Nov 10, 2021
and last updated 2021-11-10 19:54:35-05

CENTRAL TEXAS — Fall harvests continue to pour in but as farmers look ahead to planting for next year, they face some tough budget decisions.

Wild weather and equipment shortages have kept farmers on their toes all year long. Hard work paid off for many of the crops in our area, and many of the harvests across Central Texas are seeing good returns.

But now, farmers are left with another hurdle: soaring costs of essential farming supplies. Mark Welch, grain marketing economist with Texas A&M Agrilife, says most supplies across the board have taken a price hike.

"There's hardly an input cost on our budgets for 2022 that aren't going to be a larger number than what we were using for 2021," said Welch.

In this case "input cost" means anything that goes into the production of crops like fertilizer, pesticides, and seeds. The fertilizer market has hit grain crops, like corn and wheat, particularly hard.

"We're looking at all-time record high prices for nitrogen fertilizer right now," said Welch.

While it would be easy to blame the ongoing pandemic for the troubles, there are quite a few other factors at work driving up those prices. For example, a lot of the fertilizer processing power was taken away by tropical storms along the Gulf coast. Global trade patterns also aligned unfavorably at just the right time to cause more headaches.

Fertilizer isn't used in the growing operations at Waco Farms, but their bottom line also took a hit thanks to the rising prices of storage containers and shipping.

John Owen, the operating director of Waco Farms, says they've also had to pay more for fuel. Like many other industries right now, the chain reaction is passed down to the consumer.

"The rising cost has really resulted in, I think we raised wholesale prices about 30 percent to try to help cover up some of the increase of cost," said Owen.

It's the first time in a couple of years that Waco Farms has had to raise their prices, but they've been coming up with some thrifty ways to save money where they can.

"The plastic container that we store our lettuce for H-E-B, we changed it to a different type of clamshell that was around 50 percent of the price," said Owen. "And so it was just trying to get creative."

The price spike on supplies didn't occur until partially through the growing season, so the inflated input costs didn't affect the planting stage of the crops this year. Meanwhile, demand for crops has been high worldwide, so farmers are expected to fetch a pretty penny for their goods. Going into the next season is when many farmers will have to account for the rising production costs.

According to Welch's budgets, the profit turned by agriculture this year should be enough to manage the surging prices.

"For most producers that were able to even have a normal yield, yes, they benefited very directly and very strongly from these higher commodity prices," said Welch.

For some, the winter will provide a window to crunch the numbers, but not every farmer has the luxury of time to figure out how to tackle next season. Cool-season crops such as lettuce and kale are already going in the ground.