Farmers Worry Over Input Costs, Markets, Weather

Many concerns for producers but inputs and weather main topics of panel.

Published on: Feb 27, 2008

Despite record grain prices, U.S. farmers are still worried about weather and markets as they prepare for the growing season. Crop rotations and soaring fertilizer prices are also top of mind, according to a grower panel at the Bayer CropScience forum held this week in Nashville.

"Weather is an ongoing concern, but with low ending stocks, it's going to be a big part of our marketing plan," says Gail Witt, who farms with his brother near Missouri Valley, Iowa.

Anhydrous and dry fertilizer prices in his area made huge jumps over the winter. "My cousin got a quote for $760 per ton anhydrous for next fall, and you have to put down 20% to get it locked in," he says.

Weather is going to be a big concern, agrees Shawn Adam, Eldon, Iowa. Adam escaped some of the high fertilizer prices by applying 70% of his ammonia last fall.

"We're probably going to try to plant 100% corn this year, like we did last year," says Adam. "That's a price-driven decision, but it's also because we farm in southeast Iowa. We've had our struggles raising soybeans. It's frustrating, so if we can raise good continuous corn and figure out how to do it profitably, we'll keep doing it."

Witt, on the other hand, is one of many farmers shifting acreage back to soybeans this year. "Bean prices are strong enough to bring our rotation back to 50-50," he says. "In our area corn is still more profitable than beans on rotated acres, but not on continuous acres."

"We're in exciting times, but with the excitement brings challenges," says Tim Urish, who grows corn, soybeans and wheat on irrigated, sandy soils near Havana, Ill. He specializes in popcorn, seed corn and seed soybeans and used additional grain profits to purchase a nearby wean-to-finish hog operation.

"I'm concerned about the wide basis we're seeing," he says. "When we see this wheat market move the way it is, it's bound to bleed over into these other commodities and make them volatile."

Because of the sandy soils, Urish cannot apply fertilizer in fall. We weren't able to take advantage of any fall pricing so we're probably paying $150 more per ton for anhydrous than our neighbors," he says.

Farmers on the panel said they were happy with higher grain prices, but many are kicking themselves now for selling at what appears to be lower prices - and still delivering on those contracts.

"We typically sell some crop two years ahead," says Witt. "We're still delivering $2 corn, and we're a little concerned about that because of input costs. We expect to see higher profits in 2008 and 2009. But we hesitate to sell 2010 crop because we're not sure what will be profitable."

Adam agrees. "For the last eight years we looked like heroes for forward contracting, but for the last two years we look like zeroes," he says. "We have sold at a profit, but not nearly at the profit levels we could have."

Panelists were concerned about the delay in approving a new farm bill. Mark Formo, who farms near Litchville, North Dakota, says the potential loss of a federal safety net is worrisome in light of higher inputs costs.

"Input prices usually don't go down as fast as they go up," he says. "The farm bill should be there to help us out."

Urish agrees. "It's important for agriculture to have some kind of safety net with these inputs skyrocketing the way they are," he says. "As an industry we cannot afford not to have a current farm bill."