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Input Prices to Stay Steady, Go Slightly Higher in 2013

November 1, 2012
By: Rhonda Brooks, Farm Journal Seeds & Production Editor
crop inputs 2012

Fertilizer prices may actually decrease next season, while land, fuel and crop protection prices are expected to trend higher.

For the past decade, the single largest contributing factor to higher on-farm expenses has been hikes in input prices. The USDA National Agricultural Statistics Service (NASS) reports the prices-paid index for production items, interest, taxes and wage rates has risen 82% since 2002.

Whether input prices go up or down in 2013, Larry Mussack says he is prepared. He buys inputs throughout the year and evaluates prices through what he describes as a large window of opportunity.

"This year I purchased half of my anticipated 2013 nitrogen in July anddecided to wait until later in the year to buy the rest of my nitrogen and other fertilizer," says Mussack, who grows corn and soybeans near Decatur, Neb. "Right now that looks like a good move," he adds.

Farmers who aren’t proactive pricing inputs might still luck next season. Economists expect land, seed, fuel and crop protection product prices to increase only slightly this coming year, says Steve Johnson, Iowa State University (ISU) Extension farm management specialist.

Fertilizer. After a 30.2% jump in fertilizer prices in 2011, farmers will probably be thrilled to hear that fertilizer prices for 2013 might actually decrease, says Gary Schnitkey, University of Illinois Extension farm management specialist.

Larry Mussack

Whether input prices go up or down in 2013, Larry Mussack says he is prepared.

Harry Vroomen, vice president of economic services for The Fertilizer Institute, says fertilizer prices are tricky to forecast because they are affected by numerous supply and demand factors. Supply factors include energy and raw material costs, transportation costs and the value of the U.S. dollar. Demand factors, particularly globally, have a significant impact because 88% of nutrient demand is outside the U.S.

Vroomen expects U.S. farm demand for nitrogen to be flat to down 1% and phosphate and potash demand to remain stable or even drop up to 4% during the next year.

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