Input Costs Surpass Farmer Optimism Across Texas

At the start of 2022, commodity prices are picking up, but farmer optimism hasn’t quite followed.

Instead, uncertainty reigns in Texas agriculture as farmers and ranchers worry that higher prices won’t last long enough to offset soaring input costs for the 2022 crop year.

Southern Plains
Steven Walker: cotton, grain sorghum and wheat
Crosby County

The region known as the South Plains is the largest cotton growing region in the world. But the worsening drought has cotton farmers worried as they prepare to sow their crops in the dusty fields.

For Crosby County Farm Bureau (CFB) board member Steven Walker, drought is an old enemy with new worries.

“I feel a little anxious. We don’t get a lot of rain, so that’s the most critical concern. But we have a little time before we crash, and I’ve been in this situation more than once. This is something we have faced before,” he said. “But we didn’t face these high input prices. The volatility of it all makes it very nerve-wracking. This makes me very critical of each input and where I will market my crops.

Farmers have seen a shift from fertilizers to crop protection and from fuel to equipment repairs.

Fertilizers have increased to the point that they cost almost triple what they cost in 2021. Herbicides and pesticides cost double. Fuel has almost doubled, and economists warn the cost is far from its highest point as inflation takes hold. Walker estimated that parts to repair equipment, when even available, have increased by around 20%.

The only positive point is the improvement in commodity prices. Walker grows cotton, sorghum and wheat, all of which have seen strong gains in recent years. Wheat even broke through $8 a bushel, a price not seen in about a decade.

But he fears commodity prices will plummet after he spends more money growing crops.

However, farming is still a gamble.

“As farmers, we may be nervous, but at the same time, that’s what we do. It’s the trade we’ve chosen, and I’m ready for another harvest,” Walker said. “I can’t wait to see next year. It’s good to be part of a high market, but I’m still a little wary of what I’m willing to put in until we have more humidity.

north texas
Jay Davis: corn, hay and wheat, agricultural and freight transport and beef cattle;
Johnson County

It’s not as dry in northern Texas as it is on the southern plains, but that doesn’t mean farmers in the area aren’t affected.

Wheat in the region has started out in fairly good shape, but is showing signs of stress, according to Johnson County farmer and rancher Jay Davis.

Despite adding nitrogen “by the spoonful” to his wheat crop, he said it probably wouldn’t do too well without more moisture, and soon.

His diverse farming operation means he’s not too dependent on one crop. While high input costs will impact his bottom line, he’s really feeling the pinch right now in the cost of fuel for his trucking operation.

“These fuel prices just keep getting tighter and tighter. It really puts a crunch on what it takes to move grains, food ingredients, fertilizers and things of that nature around the state and the nation,” Davis said. “I think everyone is really starting to prepare for the reality of $4 diesel here this spring.”

Davis also raised concerns about the availability of crop protection tools and necessary pieces of equipment.

“When you have equipment that breaks down, trying to get replacement parts becomes a big deal. Whether it’s farm equipment, trucks on the road, or the pickup truck I drive every day to get to and from the farm, parts are getting harder and harder to find,” he said.

And high commodity prices only bolster its prospects. A 50-60% increase in the price of a commodity does not go that far when coupled with a 200-300% increase in the cost of inputs, he noted.

For a dryland farmer like him, the current situation seems somewhere between a rock and a hard place.

“I’m not in an area where I can turn on a sprinkler or run it in the furrow. If it doesn’t fall from the sky, we’ll be in the middle of planting season and running out of soil moisture. And it’s not a good place to be,” he said.

Central Texas
Bryan Morris: corn, cotton, hay and beef cattle

Central Texas is also sinking deeper into drought. Comanche County farmer and rancher Bryan Morris watches fertilizer prices go up and up and up as the land gets drier. The prospect of a profitable year seems to be dissipating at the same time.

He normally sprayed row crop fields with glyphosate and an indaziflam product, Rezilon, on his coastal Bermuda hay fields to control broadleaf weeds and prevent grass burrs. But it’s so dry there’s really nothing to spray.

This year, instead of planting more corn acreage, Morris plans to plant only enough irrigated corn to make silage for his livestock preconditioning area. It’s too dry for that bet to pay off, he said.

Despite the drought, the hay market is currently quite weak, according to Morris. Much of the hay available is consumed by livestock, but farmers and ranchers started the year with good supplies due to the above average moisture received throughout the spring and summer l last year.

He expects this situation to change as the drought is expected to continue through the summer. Morris also noted that higher wheat grain prices were putting pressure on wheat for grazing, which would help tighten hay supplies.

The dramatic increase in fertilizer prices worries Morris, who relies heavily on nitrogen fertilizer to produce hay for about 20 feed stores in west Texas and eastern New Mexico.

“These fertilizer prices are just too high. I cannot apply enough of a price increase to my product to offset the price of the fertilizer without depriving myself of the price,” he said. “We sell a lot of alfalfa, and the price has gone up $3 a bale since this summer. Grocery stores are starting to see people pull out because everything is getting so expensive.

When input costs are high, Morris noted that the only thing a farmer can really do is the same thing when faced with low commodity prices: produce more.

“From my point of view, I have to supply hay to these feed stores. The best way for me to take advantage of this situation is to grow hay and create as high yields as possible. And the only way I know to do that is to keep doing what I’ve been doing and applying fertilizer and taking good care of my fields,” he said. “I can back off a bit on the dry land, but we’re not going to stop or give up.”

south texas
Tryne Mengers: maize, cotton, grain sorghum, sesame and wheat
bee county

Farmers in Coastal Bend and South Texas already have corn crops in the ground. Bee County’s Tryne Mengers hopes the wet soil and rising commodity prices will stick around long enough to get through 2022 in good shape.

“Maize and cotton prices are higher than they have been for a long time. That’s the only reason people are half-enthusiastic about growing a crop this year,” Mengers said. “With fertilizers being two and a half times more expensive than last year, these prices must hold for us to make a profit. But it is much more than just a fertilizer. This is just the tip of the iceberg. Fertilizers have had a drastic increase in cost, but there are also many other things that affect us.

Things like machine parts, for example. Mengers had a tractor in the shop for three months, waiting for a part to arrive.

Like other Texas farmers, he worries about the availability of the items and goods needed to grow a crop. But thanks to a timely warning from his crop protection supplier, Mengers stockpiled the chemicals he thought he needed this year — a move he says definitely paid off.

To mitigate fertilizer costs where he can, he has cut back on fall applications and plans to dress down as needed if he receives enough rain to grow a decent crop.

Marketing his crops in a variety of ways also helps Mengers manage risk in years like this.

“We will hedge, buy and sell futures contracts to sell our crops, and lock in prices and pre-sell certain products,” he said. “We have already sold maize and sorghum this year, and I also made a contract to grow sesame. If we can keep these prices high and have a good harvest, it could turn out to be a very good year. »

West Texas
Josh Tunnell: cotton and grain sorghum
Martin County

The prolonged dry weather is also tempering Josh Tunnell’s expectations.

The young cotton farmer and president of Martin CFB has not made any final crop decisions and does not plan to do so until the region’s planting deadline approaches.

“It has been so dry that we are not even sure we can have a harvest. We haven’t had any measurable rainfall since late September,” Tunnell said. “So there’s very little field work here, very little money being spent and not much optimism that we’ll even be able to produce a crop if we don’t start getting rain.”

Faced with continuing shortages of glyphosate, Tunnell is trying to decide how it will manage its fields. He will likely have to rely on more tillage and hooded sprayers to get the same results he would get from using excessive applications of glyphosate or other broadleaf herbicides.

However, it’s not just glyphosate that’s missing. Many of the inputs he relies on to bring a successful crop to harvest are harder to come by this year.

“We have been told by our crop protection providers to make our plans, but to have a plan B and even a plan C, depending on what is available and what can be allocated,” he said. .

Tunnell is monitoring grain sorghum prices closely as it formulates these relief plans, and it is keeping trading expenses to a minimum.

“I think the feeling in my area is to sit tight right now. But one thing to remember is that even last year we were in a drought situation until the last week we were able to plant,” he said. “Then we practically harvested our crops on the rain received in May and June. Our harvest prospects turned around in the space of 10 days. It is therefore still a little early to give up in despair, but optimism is naturally a little low.

About Carl Schroeder

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