Input costs outpace farmer optimism across Texas

In early 2022, commodity prices are looking up, but farmer optimism hasn’t quite followed.

Uncertainty instead reigns across Texas agriculture as farmers and ranchers worry the higher prices won’t stick around long enough to offset soaring input costs for the 2022 crop year.

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

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

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

“I’m feeling a little anxious. We aren’t getting much rain, so that’s the most crucial concern. But we have a while before planting, and I’ve been in this situation more than once. That’s something we’ve faced before,” he said. “But something that we haven’t faced is these high input prices. The volatility of it all makes things very nerve-wracking. It’s making me be very critical of every input and where I’ll be marketing my crops.”

Farmers have seen increases from fertilizer to crop protection and fuel to equipment repairs.

Fertilizer has risen to the point that it costs nearly triple what it did in 2021. Herbicides and pesticides are double. Fuel has almost doubled, and economists warn that cost is nowhere near its highest point as inflation sets in. Walker estimated parts to repair equipment, when they’re even available, are up about 20%.

The only bright spot is better commodity prices. Walker grows cotton, grain sorghum and wheat, which have all seen strong gains in recent years. Wheat has even crossed the $8 per bushel threshold, a price that hasn’t been seen in about a decade.

But he’s worried commodity prices will fall after spending more money to grow the crops.

Farming is always a gamble, though.

“We as farmers may be nervous, but at the same time, this is what we do. This is the occupation we chose, and I’m ready to make another crop,” Walker said. “I’m excited to see the next year. That’s neat to be part of a high market, but I’m still a bit leery of what I’m willing to put in until we get some more moisture.”

North Texas
Jay Davis: corn, hay and wheat, agricultural and freight hauling and beef cattle;
Johnson County

It’s not quite as dry in North Texas as the South Plains, but that doesn’t mean area farmers aren’t concerned.

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

Despite “spoon-feeding” nitrogen to his wheat crop, he said it probably won’t turn out too well without more moisture, and soon.

His diversified farming operation means he doesn’t rely too heavily on any one crop. Although high input costs will affect his bottom line, where he’s really feeling the pinch right now is in the cost of fuel for his trucking operation.

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

Davis shared concerns about the availability of crop protection tools and necessary equipment parts, too.

“When you have equipment that goes down, trying to get the replacement parts is becoming a big deal. Whether you’re talking about farm equipment, the trucks on the road or the pickup I drive to the farm and back every day, parts are getting harder and harder to find,” he said.

And the high commodity prices only buoy his outlook so much. A 50-60% increase in a commodity’s price only goes so far when paired against 200-300% increases in the cost of inputs, he noted.

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

“I’m not in an area where I can turn a sprinkler on or run it down the furrow. If it doesn’t come down from the sky, we’ll be in full planting season short on soil moisture. And that’s not a good place to be,” he said.

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

Central Texas is also slipping further into drought. Comanche County farmer and rancher Bryan Morris is watching fertilizer prices go up, up and up as the land gets drier and drier. The prospect of a profitable year seems to be dissipating right along with it.

Normally, he would be spraying glyphosate on row crop fields and an indaziflam product, Rezilon, on his coastal Bermuda hayfields to control broadleaf weeds and prevent grass burrs. But it’s been so dry, there’s really nothing to spray.

This year, in lieu of planting more corn acreage, Morris plans to only plant enough irrigated corn to make silage for his cattle pre-conditioning yard. It’s too dry to make that gamble pay off, he said.

Despite the drought, the hay market is fairly weak right now, according to Morris. Much of the hay available is being consumed by livestock, but farmers and ranchers entered the year with good stocks because of above-average moisture received throughout the spring and summer last year.

He expects that situation to change as drought is expected to continue into the summer. Morris also noted higher wheat grain prices are putting pressure on wheat for grazing, which will contribute to tighter hay supplies.

The dramatic increase in fertilizer prices concerns Morris, who relies heavily on nitrogen fertilizers to produce hay for about 20 feed stores throughout West Texas and Eastern New Mexico.

“These fertilizer prices are just too high. I can’t roll enough of a price increase into my product to offset that fertilizer price without pricing myself out of the business,” he said. “We do sell a lot of alfalfa, and it’s gone up $3 a bale since this summer. Feed stores are starting to see people pull back because everything is getting so expensive.”

When input costs are high, Morris noted the only thing a farmer can really do is the same thing when faced with a weak commodity price—outproduce it.

“From my standpoint, I have to supply hay to these feed stores. The best way for me to profit out of this situation is to get the hay growing and create as high of 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 may pull back a little on the dryland, but we’re not going to stop or give up.”

South Texas
Tryne Mengers: corn, cotton, grain sorghum, sesame and wheat
Bee County

Farmers in the Coastal Bend and South Texas already have corn crops in the ground. Tryne Mengers of Bee County is hopeful adequate soil moisture and higher commodity prices stay put long enough to get through 2022 in good shape.

“Corn and cotton prices are higher than they’ve been in a long time. That’s the only reason people are halfway excited about growing a crop this year,” Mengers said. “With fertilizer being two-and-a-half times as expensive as it was last year, those prices have to hold up for us to turn a profit. But it’s way more than just fertilizer. That’s just the tip of the iceberg. Fertilizer had a drastic increase in cost, but there are a lot of other things that affect us, too.”

Things like parts for machinery, for example. Mengers had one tractor in the shop for three months waiting on a part to come in.

Like other farmers across Texas, he’s concerned about the availability of items and goods needed to grow a crop. But thanks to a timely forewarning from his crop protection supplier, Mengers stockpiled the chemicals he thought he would need this year—a move he said has definitely paid off.

To mitigate fertilizer costs where he can, he cut back on fall applications and plans to side dress as necessary if he gets enough rainfall to make a decent crop.

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

“We’ll hedge ourselves, buy and sell futures to sell our crops, and we do lock in prices and pre-sell some commodities,” he said. “We’ve already sold some corn and grain sorghum this year, and I’ve contracted to grow some sesame, too. If we can maintain those high prices and make a good crop, it could turn out to be a pretty good year.”

West Texas
Josh Tunnell: cotton and grain sorghum
Martin County

Extended dry weather is tempering Josh Tunnell’s expectations, as well.

The young cotton farmer and Martin CFB president hasn’t made any final crop decisions and doesn’t plan to until closer to the area’s planting deadline.

“It’s been so dry, we’re not even sure we’ll be able to have a crop. We haven’t had any measurable rainfall since the end of last September,” Tunnell said. “So, there’s very little fieldwork happening around here, very little money being spent and not a lot of optimism that we’ll even be able to produce a crop if we don’t start getting some rain.”

In the face of enduring glyphosate shortages, Tunnell is trying to decide how he will manage his fields. He will likely have to rely on more tillage and hood sprayers to get close to the same results as he would using over-the-top applications of glyphosate or other broadleaf herbicides.

It’s not just glyphosate in short supply, however. Many inputs he relies on to bring a fruitful crop to harvest are harder to come by this year.

“We’ve been told by our crop protection suppliers to make our plans but have a Plan B and even a Plan C, depending on what’s available and what can be allocated,” he said.

Tunnell is keeping a close eye on grain sorghum prices as he formulates those backup plans, and he’s keeping business expenditures to a minimum.

“I think the sentiment in my area is to just sit tight right now. But one thing to remember is that even last year we were in a drought situation right up until the last week we could plant,” he said. “Then, we pretty much made our crops on the rain received in May and June. Our crop prospects turned around in a matter of 10 days. So, it’s a bit early to throw up our hands in despair yet, but optimism is understandably a little low.”

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