October 31, 2011

Corn, soy input costs seen to climb up to 20% in 2012

Led by fertiliser and seed growth, farmers can anticipate to spend as much as 20% more to produce corn and soy in 2012 than they did in 2011, Ohio State University Extension experts said.

"We're expecting to see input costs increase somewhere between 5% and 20%, depending on the crop and the level of inputs relative to the quality of land farmed," said Barry Ward, leader of the Production Business Management program in the Department of Agricultural, Environmental and Development Economics. "There will be increases, in some cases substantial increases, but this is not unexpected. Most growers are already seeing it showing up in planning for 2012 as farmers make pre-purchases."

Ward said increases in the cost of fertiliser and seed are the key drivers of the expected increases, reflected in newly released enterprise budgets developed at Ohio State. Extension professionals develop the annual enterprise budgets as guidance for farmers planning the next year's crop.



"We've seen enough significant increases in fertiliser costs that it will be a pretty big bump over last year," he explained. "The way fertiliser prices have been moving, it's been purely demand driven. With worldwide crop prices being high, fertiliser prices are staying relatively well correlated with commodity prices."



That correlation is the market's way of telling farmers "not to skimp on fertiliser," according to Ward. He said farmers in the US compete with agricultural sectors in competitive countries like Brazil and China for many crop inputs, but especially for fertiliser. That demand drives the cost of the product.