A Tipton County farmer harvests corn late Monday evening. Most Hoosier farmers will have good enough yields and high enough prices to make a profit this year, despite the fact their cost increases are double the national inflation rate of 8.2%. Tim Bath | CNHI News Service
Indiana farmers this year have faced ballooning fertilizer and seed prices, a dangerous lack of rain and record inflation that drove up corn-growing costs by about 30%.
But Blake Burgin, a 29-year-old farmer in Clark County, said he can’t complain, even with the throng of obstacles he’s had to navigate.
“We’re feeling pretty good,” he said. “We’re real happy with everything we had.” That’s because Hoosier farmers have produced a solid corn and soybean harvest, and crop prices have steadily climbed since July. The average closing price of a bushel of corn is now over 18% higher than last year, and nearly double from 2020. Soybeans are 13% higher than last year and up 40% from 2020.
Most farmers will have good enough yields and high enough prices to make a profit this year, despite the fact their cost increases are double the national inflation rate of 8.2%.
But Indiana growers’ gains came from other farmers’ pain, said Michael Langemeier, associate director of Purdue University’s Center for Commercial Agriculture.
Crop prices are high right now only because of the devastating drought in parts of the central U.S. that ravaged crops and drove up the demand for corn and soybeans, he explained. Those dry conditions led the U.S. Department of Agriculture earlier this month to reduce the nation’s projected corn harvest by 49 million bushels and drop the bushel-per-acre yield average to 172. For comparison, corn fields farmed by Burgin in southern Indiana have produced nothing below 200 bushels per acre, he noted.
Other major events that have significantly increased demand for U.S. crops include the war in Ukraine, which is known as the bread basket of Europe, and a rough harvest in Brazil, the world’s largest grower of soybeans, Langemeier explained.
“It’s not really a shortage, but they’re just smaller supplies than what we were expecting,” he said. “And any time those supplies are smaller than what you expect, you’re going to see higher prices.”
Brad Winger, a farmer in Howard County, said the unique circumstances playing out around the globe have created a strong market in Indiana during a year when better-than-average crop prices are sorely needed to turn a profit.
“I’m glad I’m in Indiana,” he said. “We kind of had a perfect storm here, and maybe in Ohio and Illinois as well. But out west, it’s pretty bad. Some farmers took it on the chin and really got hurt.”
Hoosier growers might be breathing a sigh a relief, but worries about 2023 are already taking root.
In September, farmers reported feeling less optimistic about their prospects, according to Purdue’s Ag Economy Barometer index. That stems mostly from current conditions, especially the skyrocketing price of input costs such as fuel and fertilizer, the study found.
Producers are also becoming increasingly reluctant to make large investments in their operations, given rising interest rates.
Tom Boyd, a 73-year-old farmer in Daviess County, said his operation was lucky enough to have locked in prices last year on seed and fertilizer, which helped smooth over the impact of the dry weather that led to lower yields in his fields.
But now, the farm will have to pay more than double for next year’s fertilizer, he said, noting a load of potash today costs $800 compared to just $250 three years ago.
“It’s just out of sight,” Boyd said. “You might lose as much as you made this year. I don’t know how the country can handle something like that.”
To prepare for what could be a leaner market, Burgin and his family decided to cut back on costs by not upgrading equipment. The price of new tractors and combines his risen dramatically.
A farm can only cut expenses so much, though, before it threatens to impact yields and profits, he said.
There’s also the issue of record-low water levels on the Ohio and Mississippi rivers, making it hard for barges to transport grain up and down the waterways.
That’s a real concern for Burgin, who farms near the Ohio River, and other growers who depend on those ships to transport goods. If crops don’t get shipped fast enough, grain facilities might run out of storage space and close, he explained.
“They’re not moving the number of barges that usually get moved, and it’s getting a little worrisome,” he said. “If you don’t have enough grain bins and the granaries do shut down, we’re gonna be up the creek without a paddle.”
Considering so many obstacles, Langemeier said, most Hoosier farmers aren’t looking forward to next year’s season, when any drop in crop prices coupled with high input costs could mean painfully tight profit margins.
“It’s really causing some angst,” he said. “I think the uncertainty is at a really high level right now. It’s a scary environment for any industry.”
If anybody can handle the unknown, Burgin asserted, it’s farmers, who plant a crop every year without any certainty about what the financial markets or Mother Nature might bring.
“There’s a lot of uncertainties and there are a lot of easier ways to make a living,” he said. “It’s a gamble every day. But the farming community, we’re the biggest bunch of gamblers out there.”
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