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Rising input costs creating tough budgets for farmers

Posted at 7:54 PM, Jan 19, 2022
and last updated 2022-01-20 00:19:04-05

CENTRAL TEXAS — It's getting more expensive for farmers to grow crops, and with spring approaching, they're facing some tough budget decisions.

Preparation for the next growing season starts months in advance, and farmers are using this time to make sure all their necessary resources are squared away. It's become the source of financial headaches, with everything from seeds, to machinery parts, to labor all soaring in price. Fertilizer is the biggest offender.

Brant Wilbourn, associate director of commodity and regulatory activities at Texas Farm Bureau, said that's due to just how much of the budget goes into fertilizer.

"Fertilizer basically accounts for about 30 to 35 percent of farmers' operating costs on their farm. Fertilizer prices have risen dramatically over the past year," said Wilbourn.

Just how much of a rise? At least 80 percent more expensive than last year according to Texas A&M, although other sources put that number at upwards of 150 percent. With such a huge chunk of change going toward fertilizer, farmers may have to figure out how to be more efficient with what they have.

"Maybe use a little less and see if we can get away with that this year. You know, that's not a long-term solution but it can be a short-term solution," said David Anderson, extension economist with Texas A&M AgriLife Extension Service.

More economic use of fertilizer may not be possible in all scenarios. Some farmers may elect to plant a different crop this year, something that requires less attention or is more cost-effective.

"They could change their crop rotation to plant something that's less input-intensive so they can reduce their costs that way as well," Wilbourn said.

The spike in input costs across the board comes as a blow to the agriculture industry, which was hoping to benefit from high commodity prices. Instead, the money spent preparing for this year may offset any gains made when crops hit the market later in 2022.

"What's going to happen is, some of these rising costs are going to take care of, or eliminate, all that profit margin that was there from market prices looking pretty good for the coming season," Anderson said.

Anderson also noted that while natural gas prices have gone up somewhat, they aren't nearly high enough to justify the current price of fertilizer.

Wilbourn attributes some of the high fertilizer prices to ongoing tariffs. He says that if supply chains were to get back to normal, the current input cost issues would see a great improvement.