The good news for Benjamin Rice is that the price for the corn and soybeans he grows on his Philo, Illinois, farm are up this year – a bright spot at a time of uncertainty and upheaval made worse for agricultural producers around the world by the war in Ukraine.
“This year compared to two years [ago], we’re up in that 50 percent range [of higher prices],” he told VOA during a break in his work in the fields during the harvest.
But market forces working in Rice’s favor will only benefit him if he can sell the yield from his crops in time. “We’re seeing swings every single day of easily 10, maybe 15 cents of corn and 30 to 70 cents in beans. So, if you can sell one day for 70 cents higher for what tomorrow is going to be, they aren’t small swings anymore,” he said.
Contributing to price fluctuations are some factors farmers can’t control, like the weather and drought conditions lowering water levels on the Mississippi River, which prevents crop-carrying barges from easily navigating the important waterway leading to international shipping ports.
While high crop prices are good news for farmers, this year they come with a downside. The cost of doing business is also up.
The price of diesel fuel that powers farm equipment is near an all-time high. So is the cost of nitrogen-rich anhydrous ammonia fertilizers, made using natural gas, which farmers rely on to boost crop yields.
“It’s 40% above the cost last year,” Rice said. “And it’s over 100% the cost it was two years ago for the exact same product.”
The U.S. Department of Agriculture reports that fertilizer prices account for a hefty segment of farm cash costs – nearly one-fifth. The proportion is even larger for producing wheat and corn.
While his farm is far away from battle lines in eastern Europe, the effects of the war in Ukraine – and the resulting disruption to natural gas and other supplies – are rippling through Rice’s fields in the midwestern United States.
“Ukraine and Russia combined export – I believe it’s somewhere in the 30%-to-40% range of the world’s use of anhydrous ammonia, and I know that they are also a big player in that natural gas market,” Rice said. “And as soon as that [war] started, the numbers just exploded on what our input costs were.”
Those costs haven’t come down since.
“They’re already taking a look at next year’s prices, where they are seeing triple predictions,” said DeAnne Bloomberg of the Illinois Farm Bureau (IFB), speaking with VOA from the group’s headquarters in Bloomington.
Even higher prices
Bloomberg emphasized there’s no easy way to lower fertilizer costs. “You can’t just rachet up fertilizer production,” she said. “It takes years for that.”
So high input prices could go even higher – concerns the IFB is relaying to federal and state lawmakers, urging action where possible.
“Gasoline prices, and being able to have the supply chain opened up and available, is one piece that we can look at because it is extremely regulated,” said Bloomberg. “So, any of those pieces that regulate those inputs is where government can come into play.”
What farmers aren’t asking for – yet, Bloomberg added – is a return to direct government payments to offset increased costs.
“They also want to work on free markets, and let the markets move through it,” she told VOA. “I don’t see that that’s been on their radar.”
As the war in Ukraine drags on, food prices continue to rise and inflation weighs on economies across the globe.
The economic headwinds come at a time when farmer Benjamin Rice is making tough decisions about fertilizer applications ahead of next year’s planting season.
“I want to cut back and be responsible about it, but not too much to end up hurting next year’s crop,” he said. Acknowledging a delicate balancing act he may have to contend with for years to come, Rice added, “It’s been a roller coaster for sure.”
…
