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Commodity Prices -- And Input Costs -- On the Rise

posted on March 3, 2011

The impact of higher food prices was evident two weeks ago, when the Commerce Department reported its Consumer Price Index rose 0.4 percent in January.

But stripping out the volatile food and energy sectors, the government said, so called, core inflation rose a more tepid 0.2 percent.

For America's farmers and ranchers who benefit from favorable agricultural commodity prices, but who also must contend with rising input costs, higher prices are a double-edged sword.

And when the Agriculture Department released its latest estimates on farm prices this week, virtually no one was surprised to learn the numbers for just about everything are up considerably...

Commodity Prices -- And Input Costs -- On the Rise

Each month, the government examines prices received by farmers for a wide range of crops and livestock. Using historical data from the early 1990s the data are compiled into a handful of indices comparing prices farmers and ranchers RECEIVE with the prices they PAY.

For February, the "All Farm Products Index" which reflects prices producers RECEIVE was pegged at 168 percent of its 1990-1992 figures. That's up 24 percent from last year.

But higher costs for many inputs including feed, fuel and fertilizer contributed to increases on the other side of the ledger as well.

According to USDA, the "Index of Prices Farmers PAY rose to 197 percent of its 1990-1992 average... up nearly 10 percent from last February.

While noting higher input costs for livestock producers, USDA reported cattle and hog prices collectively were up 24 percent from last February.

And prices received for dairy products rose 16 percent last month, while poultry and egg products rose less than one percent.

Tags: agriculture economy food news