Rising production costs — what it costs a farmer to produce a crop — are consuming most of the profit farmers might receive from the record prices crops like corn and soybeans are bringing.
“Although some crops are bringing record prices, farmers are paying record prices for things such as fuel, fertilizer, feed and seed that go into producing our crops and raising livestock,” said J. Louis Hunt, Walker County Farm Bureau president. “The higher commodity prices our crops are bringing are barely covering our higher production costs. We’re feeling the pinch of higher fuel costs just like our consumers.”
Higher energy prices, increased demand from China and India for agricultural production supplies and the weak value of the U.S. dollar are all factors contributing to higher production costs for farmers and ultimately higher food prices for consumers, economists say.
UGA economists predict it will cost Georgia farmers 14 percent more to grow cotton this year than last and 49 percent more to grow corn. The production costs for growing peanuts are up 21 percent from 2007, while the production costs for soybeans are up 49 percent. Since 2002, costs are up between 40 and 75 percent for these same crops. All of these production cost estimates are for irrigated crops. Drought conditions or sporadic rain make it necessary for farmers to irrigate their crops. Irrigation systems are fueled by diesel fuel or electricity, both of which have seen price increases. In 2007 alone, total cash farm expenses rose to $222 billion, according to the USDA.
Farmers receive only 19 cents out of every retail dollar spent on food, according to the USDA Economic Research Service. Off-farm costs, which include marketing expenses associated with processing, packaging, wholesaling, distributing, transporting and retailing food products, account for the remaining 81 cents of every retail dollar spent on food.
(Walker County Messenger)