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Many farmers expect cost increases will last into 2023

A significant number of America’s biggest farmers expect this year’s sharp increases in the price of fertilizer, pesticides and machinery parts to continue in 2023, said Purdue University on Tuesday. Three of every four producers polled for the monthly Ag Economy Barometer said they expected farm input costs to rise by at least 20% this year, while more than one-third said they expected 2023 crop input prices to be at least 10% higher.

“It is hard to overstate the magnitude of the cost increases producers say they are facing,” wrote economists James Mintert and Michael Langemeier, who oversee the barometer. “Forty-two percent of producers chose higher input costs as their biggest concern, which was more than twice as many who chose government policies (21%) or lower output prices (19%).”

Although farm inputs costs increased by an average 1.8% annually in the past decade, participants in the Purdue survey said high inflation was the rule now. Some 75% said farm inputs would cost at least 20% more than in 2021; 46% said the increase would exceed 40%.

Looking to 2023 crops, 15% said they expected input costs would be up by 10% to 20% and 21% said the increase would exceed 20%. The poll is targeted at the largest grain and livestock producers in the country.

“Crop input challenges extend beyond their inflated costs to their availability,” the economists said. In the latest poll, 34% of producers said they had difficulties in purchasing inputs for 2022 crops, a 7-point increase from the previous month. And 11% of producers said they had received notice from a supplier that inputs already purchased would not be delivered.

The barometer, a gauge of the health of the agriculture economy, had a reading of 121, up 8 points from last month but 32% lower than a month ago.

The Ag Economy Barometer is based on a telephone survey of 400 operators with production worth at least $500,000 a year. Producers were contracted from April 18-22. USDA data say the largest 7.4% of U.S. farms top $500,000 in annual sales. The barometer has a margin of error of plus or minus 5%.

The Ag Economy Barometer is available here.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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