Rising costs for local farmers are hurting consumers | News, Sports, Jobs
Most Americans are feeling the strain that rising fuel prices are putting on their wallets, but for one group, it’s not just the price, but the resulting shortages.
Local farmers are feeling the effects of rising prices and now rising interest rates, which will in turn impact their consumers.
“It’s more than the price of fuel right now,” said Brian Barth, who along with brothers Scott and Dan owns BNB Farms Inc., which includes 3,000 acres among 40 plots in Mount Jackson, Pa. to Poland.
“The fuel situation has caused so many shortages and price increases for other products that we need to grow. Consumers don’t realize that they are one season away from having the products they expect from us. “, he warned.
Agriculture accounts for about 20% of Ohio’s gross domestic product, and 1 in 7 Ohioans are employed in industry, according to World Atlas.
The war in Ukraine, whose flag depicts blue skies over a wheat field, has severely affected farmers 5,000 miles away in the Mahoning Valley. Together, Russia and Ukraine export more than a quarter of the world’s wheat. Russia alone exports about a quarter of the world’s natural gas.
The war led to instability for both countries and their exports fell as a result. They have the same growing season as the United States, so the war comes at a time when American farmers have traditionally relied on their exports of natural gas and fertilizer for their crops.
Corn loves nitrogen, a fertilizer for the crop. This year it is an expensive commodity due to a global shortage of natural gas. Nitrogen for Barth’s 5,000 gallon tank typically costs around $7,500; now it’s $25,000.
Natural gas is also needed once the corn is harvested, to dry it slightly so that it does not rot.
Barth usually plants half of his fields with corn and the other half with soybeans. This year, he has sown a third of the fields with corn and two-thirds with soybeans.
He said many other U.S. farmers likely did the same, but until the U.S. Department of Agriculture releases its annual plantation report, there’s no way to know for sure.
A corn shortage will likely result from higher nitrogen prices, Barth predicted.
Fertilizer prices have doubled or tripled for farmers due to many supply chain issues worsening at the same time.
Schwartz Farms in Cortland pays between $90 and $120 per acre to fertilize its crops. Last year he paid $20 to $30 an acre.
“There were a lot of guys who bought seed, were ready to plant, and were totally caught off guard by fertilizer prices,” said John King, chief operating officer of Schwartz Farms.
Off-road diesel, which is used in farm equipment, was up $2 a gallon from this time last year. Combined, fuel and fertilizer costs for Schwartz Farms increased by 200%, adding approximately $350,000 to farm input costs.
Schwartz Farms grows corn, wheat and soybeans, as well as a handful of specialty crops. He also contracts about 14,000 acres in Ohio, Pennsylvania and New York.
Due to higher input costs, farmers are able to sell at higher prices.
The price of wheat doubled, which, according to Rick Molnar of Molnar Farms in Poland, helped cover some of the initial costs.
“We can’t change much about our input costs,” Molnar said. “We have to do what we have to do and look forward to next year.”
He can now sell wheat for $10 to $11 a bushel, up from $5 a bushel last year. This has caused his farm to manage more cash than usual, but it will go towards paying the high input costs. He doesn’t think the farm will make higher profits.
Soy and corn are used as alternatives to wheat. Due to the high price of wheat, the demand for corn and soybeans has increased, pushing up their prices.
Soybeans are currently selling at about 1 1/2 times the usual price, and the price of corn has doubled. Barth thinks that won’t be enough. He’s already taken out a loan to help cover this year’s input costs, and he’ll likely have a lower profit margin than most years.
“This year, I think most farms will be fine,” King said. “Next year, as costs continue to rise, we may see some people having to take out big loans and make tough decisions.”
Last week, the Federal Reserve raised interest rates by three-quarters of 1%, the biggest hike since 1994. That could hurt local farmers for years to come, he said.
Because crops are being sold at higher prices this season, the seeds for planting next year will be higher, King noted. Many farms will have lower profits this year, which could make it difficult to plant next year.
Later this summer and fall, farmers typically begin placing orders for seeds and other necessary materials, such as fertilizer, for spring planting. Because the costs are so high now, it might cause some to wait.
All of these additional costs that farms are currently facing will continue to pass through to consumers at harvest time.
“Costs to consumers could unfortunately get worse,” said Nick Kennedy, Farm Bureau organizing director for Columbiana, Mahoning, Portage and Stark counties. “But, we are already seeing higher prices in grocery stores because of these issues.”
Corn, wheat and soy are all used in a wide range of products, from food and cosmetics to fuels and adhesives. Thus, the high prices of these crops affect many other markets. This includes the livestock industry.
Farmers who raise livestock depend on those who grow crops for basic needs such as feed, straw and hay. It will become more expensive for these farmers to raise their animals, which will probably encourage many of them to raise less.
This will in turn lead to a shortage of meat, dairy and eggs, which will increase the prices for consumers of these items.
“The farming community depends on itself for so many products that we use every day,” King said. “When one area is hurt, we all suffer.”