Where is Inflation Applying its Pressure on the Farm?

Written by Darla Huff, Director of Agriculture

As we all know, inflation is pushing prices higher in nearly every aspect of our lives. From milk at the grocery store to electronics, clothing and almost everything in cardboard boxes shipped by Amazon, we’ve seen an uptick in consumer and business costs. 

When I’m out talking to our ADS contractor partners, they’re asking me what I’m seeing in our farm market, and I wanted to share some of that here with you. Because like ADS, our partners are trying to gauge what their farmer customers are dealing with, and where they plan to go this year with their investments. 

Bottom line: those farmers have incredibly difficult choices to make, particularly as inflationary pressures hit nearly every one of their inputs. Obviously, I’m not the only one seeing this, and farmers are looking to their counterparts and economists to decide what route is best for their farm in 2022. 

“Most all production costs are going to be higher,” Bryon Parman, North Dakota State University economist told AgWeek recently. From crop inputs, to equipment to labor, "there are inflated costs down the line."

Here are a few of those major increases: 

• The American Farm Bureau Federation says fertilizer prices have skyrocketed 300% in some places. Ammonia is up 210%, liquid nitrogen more than 159% and urea is up 155%, just to name a few. 
• COVID-19, workforce and supply chain disruptions, in particular, have animal feed producers expecting continued high prices. 
• University of Illinois economists predict per-acre corn seed costs to increase $6 to $7 in 2022 over 2021. 
• Farm machinery costs such as tractors, combines and plows continue to increase due in part to chip manufacturing supply issues – some rising as much as 17%. 
  
  

Farmers are truly being hit from all sides. While we’ve seen uncertainty and tumultuousness in the plastics market over the past 12 months, we finally started to see a softening in this market at the start of 2022. The hope is that the volatility will continue to stabilize, however, increases in energy costs have sharply moved front and center as Russia escalated its hostilities against the Ukraine, creating yet another potential uptick across all markets as diesel continues to surge. In the meantime, we expect our investments in capacity to build up our supply base, including our recycled materials inputs, and help contribute to that stabilizing trend we began to experience earlier this year. 

So here is something I expect to see in 2022: even with the uncertainty overseas, the plastics market will rebound and stabilize much faster than other input markets, and farmers will seriously consider investments into one-and-done inputs such as tiling.  These projects are not only more price stable, but as so many farmers and contractors already know, they will have an ongoing, long-term positive impact on crop yields, crop health, and land value. 

I’d love to hear what you’re seeing from your farmer customers as well. Feel free to reach out to me at darla.huff@adspipe.com, and we’re looking forward to working with you in 2022!