Feature Contributors

Spring Farm Challenges

The month of March was cold and wet.


From an agricultural perspective, the cold is fine as it has slowed the growth of fruit trees and other overwintering plants. Otherwise, they may have a tendency on a warm day to start their biological process toward blooming only to have that bloom killed in a late spring cold weather snap. Several years back, we had three 80-degree days in March and no fruit crop that year because of the late cold.


The wet part has its good and bad issues. We needed the moisture recharge after a dry fall, but our livestock producers would rather forego the muddy lots and they would also like to do some field applications of manure.


Manure has become a more valuable asset as fertilizer prices have increased over the past few years. Many farmers in our area purchase chicken manure to be spread on fields.It has become a hot commodity in some areas, there are even chicken manure auctions. Besides its organic and nutritive values, it also contains trace minerals and is considered organic fertilizer by certifying agencies. This not only includes the conventional farmer but the organic ones into the auction. One auction in Pennsylvania had 40 bidders this past year.


Input prices are now the main concern of farmers. Leading this list are fertilizer prices. The index Purdue Economist uses for inflation shows general economic inflation at 5.5%, while agriculture production costs increased at 12.5% this past year. The University of Illinois reported: Fertilizer costs for corn were $175 per acre using September 23, 2021 price and increased by $72 per acre to $247 per acre (a 41% increase) using September 22, 2022, prices. Soybean costs increased from $85 per acre to $110 per acre, an increase of $25 per acre. Prices have decreased over the past several months but still are sustainably higher than in the past. Around 21% of the cost of growing corn is the fertilizer charge.


Around 40% of production cost is in the machinery that is needed to produce a crop. With the Covid shutdowns of many manufacturing plants in 2020, coupled with the lack of steel and computer chips, used equipment soared in price. This market is still red hot. Manufacturers have ramped up production but are still years behind as demand far exceeds supply. Today’s higher interest rates are having little effect on demand with some farmers having cash and nowhere to invest. That means taxes are being paid on income that normally would have been reinvested in the same tax year.


The increase in interest rates is having some effect on the farm economy. As we come back to what economists call a more normal historical rate, those farmers needing an operating loan to put in a crop will feel those higher interest rates.


These interest rates are also negative for land value. However, there are so many other positive factors such as cash rent returns, buying land as an inflation hedge, and outside investors, diversification have been supporting increasing land values.

Farming is a risk and along with that risk we are in an uncertain environment. There are many outside worldly factors entering into agriculture that affect the cost and the prices of our grains and livestock. One of those is the Ukraine situation and in general, our relationships with other countries. On any given day our trading with another country could be disrupted by some international event.


On one side we may be badmouthing China while they are our second largest import market. Soybeans accounted for nearly one-half of U.S. agricultural exports to China. They also purchase corn, beef, chicken meat, tree nuts, and sorghum. Just under 20% of our agriculture exports go to China.


Let's just hope that, unlike the Russians, cooler heads prevail in international relations.