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Push Those Pencils

November 9, 2010
InputCosts Josh
Weighing chemistry and trait combinations is something Josh Smith of Auburn, Ill., takes seriously. So far, he’s been able to elude the threat of weed resistance.  
 
 

Josh Smith changed his soybean herbicide program in 2010 because it was the right thing to do. The threat of glyphosate-resistant weeds convinced him to be proactive and alternate herbicide modes of action.

The falling price of glyphosate now has the Auburn, Ill., farmer rethinking that strategy for 2011. He’s leaning toward going back to a Roundup Ready platform, despite being satisfied with his soybean yields in the alternative LibertyLink system. “Glyphosate is just so darn cheap that it is hard not to use it,” he says.

An early harvest has given growers like Smith more time to push the pencil this fall. Inputs are being scrutinized even more carefully in light of price volatility.

Joe Nichols of Cadiz, Ky., is thankful he already has most of his 2011 inputs bought and paid for.

“Nitrogen prices are jumping right along with the corn prices,” Nichols says. “We just drilled a lot of wheat into the driest conditions I can remember. I expect this next crop to be one of the most confusing of my lifetime, as I’m making so many decisions based on a lot of unknowns.”

It depends. The outlook for 2011 input costs boils down to this: it depends. Final farmgate prices depend somewhat on how well your retailer priced and how much of price value was passed on to customers. It depends on whether you were able to lock in volume discounts and/or use bundling incentives to decrease costs. It depends on where you live.

Finally, it depends on who you ask. Purdue University economists Bruce Erickson, Alan Miller and Craig Dobbins see crop costs climbing in 2011 after dropping slightly for the 2010 crop. As of October, Purdue crop budgets show production costs for rotation corn up 10%, soybeans increasing 5% and wheat up 12% compared to January 2010—fueled mostly by increases in fertilizer prices.

University of Nebraska agricultural economist Roger Wilson is still number-crunching to determine crop budgets for 2011, but he expects average prices to mostly hold steady for the coming year.

“However, averages hide a lot of information,” he says. “For instance, average seed price has declined slightly less than 2% but this change includes an increase of 27% for sugar beets as well as a decrease of 33% for millet—which doesn’t tell corn and soybean growers a lot.”

Seed choices. Few input sectors have grabbed headlines like seed. The amount of genetically modified corn acres is catching up to soybeans and, as a result, growers are paying more for seed as they adopt technology, despite some price rollbacks for next season.

The new eight-trait SmartStax technology developed cooperatively by Monsanto and Dow AgroSciences drove seed prices to new levels in 2010 and caused some grower pushback. Monsanto spokesman Ben Kampelman says DeKalb Genuity SmartStax will be priced an average of $50 less per unit for 2011 compared to 2010.

“We’re committed to increasing the farmer’s probability of trialing this technology,” Kampelman says. “We hope this price reduction will make the decision easier.”

Hank King, Mycogen Seeds senior corn marketing manager, says that for 2011 Mycogen will continue to offer zone pricing using historical yield data, insect pressure and grower input on the value proposition of SmartStax compared with various trait packages. “Our pricing strategy for SmartStax will support broad adoption,” he says.

Mycogen SmartStax hybrids will also experience a $40 to $50 per bag retail price reduction compared to 2010 levels.

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FEATURED IN: Farm Journal - Mid-November 2010
RELATED TOPICS: Farm Business, Inputs, Production

 
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COMMENTS (1 Comments)

HBSS Law
Farmers claim that they overpaid for livestock feed and fertilizers containing magnesium oxide. They are blaming Premier Chemical and other chemical suppliers of fixing the price of caustic and dead-burn magnesium oxide – a compound widely used in farming.

If you believe you paid too much for farming products containing magnesium oxide, I suggest you to contact the attorneys I work with at hbsslaw.com/mgo. They are trying to stop these large chemical suppliers from illegally making millions off the backs of America’s farmers and ranchers.

5:05 PM Nov 22nd
 



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