Cropping Costs Explode

October 5, 2005

October 5, 2005

If you think your cost in raising the 2005 crop was high, as the saying goes, "You ain't seen nothin yet." Wait for 2006. This year's corn crop cost 20% more to grow than just 2 years ago. The same can be said for most farm crops. According to the American Farm Bureau Federation, we have seen farm energy costs skyrocket. The energy bill to the American farmer is up more than 6 billion dollars over the last 2 years. And they have continued to escalate this year with the fuel price index up another 39%. On top of that we have seen a 50% increase in diesel fuel cost and a 15% increase in fertilizer. According to energy specialist Troy Breedenkemp, "These are not price spikes. We've seen a fundamental shift in the input costs the past three years."

It doesn't seem to me that there's any relief in sight. In fact, next year's nitrogen, without a doubt, is going to cost more than this year's L.P. gas to dry corn and heat the barns this winter will be more costly. Then we must couple all of this with a crop yield reduction for many farmers because of drought, farmers hurt by the hurricanes, and lost grain and oil seed prices. This adds up to a lot of financial stress.

This is the backdrop that the Congress and the Administration have hanging over head as a new farm bill is to be written and a World Trade Agreement to be negotiated.

The conditions I have outlined don't paint a pretty picture. In looking for a silver lining (since misery loves company) I could point out that the escalating energy prices are global. Farmers in France as well as farmers in Brazil are looking at the same numbers.

Also let's hope that the conversion of crops into energy can clear out the grain carryover and lift prices. We need that.

Until next week, I am John Block from Washington.