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Rising Input Costs

posted on April 21, 2006

Favorable weather conditions throughout the Grain Belt are luring farmers back into the fields for the annual rite of Spring planting. Several weeks ago, the government's planting intentions report moved the markets when USDA projected a substantial shift in acreage. Nationally, USDA is predicting fewer acres will be planted in corn and wheat, while more land will be devoted to soybeans. Weather conditions could influence planting decisions in the days ahead, but one thing's for certain... fuel and fertilizer costs are sky high.

Rising Input Costs

According to a report released by the University of Missouri's Food and Agriculture Policy Institute farmers will be paying a lot more for fuel and fertilizer in 2006.

The report predicts fertilizer costs will be 10 to 15 percent higher than last year while the price of a gallon of diesel fuel could climb almost 10 percent above 2005 levels.

The wild swings in the price of a barrel of oil have already been whip-sawing fuel prices. According to figures from the U.S. government's Energy Information Administration retail diesel prices have been volatile over the past six months. The average price per gallon currently is 2 dollars and 59 cents, but that amount has been as low as 2 dollars and 7 cents to as high as 2 dollars and 86 cents.

No doubt farmers will feel the pinch. According to USDA, 25 percent of the variable costs associated with an acre of soybeans will be devoted to fuel and fertilizer while 50 percent of the same costs go towards an acre of corn.


Tags: agriculture news