Cost of Production Concerns Detailed in Farm Bureau Reports

Increases in the cost of production are being highlighted in a series of reports from the American Farm Bureau Federation (AFBF). Market Intel information details how costs are outweighing gains made in commodity prices. Farming expenses such as fertilizer and energy have grown substantially more burdensome over the past 12 to 18 months. Even with increased global demand helping to push prices higher, AFBF Zippy Duvall said there is growing concern for the season ahead.

“The rising prices for fuel, fertilizer and other supplies create an unwelcome counterforce to higher commodity prices,” Duvall explained in a news release. “Higher prices for crops are getting a lot of attention right now and of course help farmers balance the books, but when expenses are rising just as quickly or even outpacing revenue, the financial gains evaporate. Right now, there are serious concerns about whether farmers will be able to access the supplies they need to put a crop in the ground.”

According to the Market Intel report, 2022 production expenses overall are projected to increase six percent over the previous year. Between 2020 and 2021, the cost of production rose 12 percent. Farming expenses have increased every year since 2016. Some of the most profound cost increases have been for marketing, storage, and transportation, as well as livestock and poultry. Since 2013 the cost of marketing, storage, and transportation has increased 59 percent. Livestock and poultry expenses have grown by 46 percent since 2013.

The increased costs of chemicals, fertilizer, and seed have made a significant impact on farmers, as they collectively account for more than 17 percent of farming expenses. Costs of on-farm labor, as well as other ag supporting businesses have created further complications for producers. The disruption of labor markets and the overall supply chain brought on by COVID-19 have exacerbated the impact of rising farm expenses. The ongoing Russia-Ukraine conflict is also contributing to further increases in fuel and energy prices.

Source: AgNet West