If you feel like the costs for seed and crop chemicals have been growing while your crop revenue has been shrinking, you’re not imagining it.
According to analysis by Gary Schnitkey and Sarah Sellars at farmdoc Daily, the expense for these important inputs now represent 48% of crop revenue.
That growth has come since 2006, during a period when corn prices reached as high as $6.93 in 2012. Those rising corn prices also pushed up input costs, nearly tripling the annual rate of growth for some. Fertilizer, for example, went from an annual average growth rate of 2.6% between 1990 to 2006 to 8.1.% after 2006. Pesticides almost doubled, with an average annual 3.5% increase before 2006 to 5.7% afterward. And seed, which had risen an average of 4% before 2000, almost tripled to an annual average growth rate of 11.3%.
For farmers, it means that an increasing share of revenue is going to cover inputs, creating a situation that is financially unsustainable at current corn prices.
“Farmers need to take proactive actions to reduce rates and amounts of inputs applied,” write Schnikey and Sellars. “Even with aggressive input usage cuts, it will be difficult for cash flow losses to be reduced without input price decreases.”