Global issues hit home as Louisiana farmers face high fuel, fertilizer costs

(03/15/22) BATON ROUGE, La. — At St. Louis Planting Co. in Iberville Parish, Patrick Frischhertz is busy checking off the list of usual springtime chores at a sugarcane farm: preparing rows for planting and applying fertilizer.

Far from usual, however, is the cost of completing these tasks.

Potash fertilizer is about 250% more expensive than it was two years ago, Frischhertz estimates. Some herbicides have doubled in cost and become hard to find. The price of diesel for tractors has shot up amid recent geopolitical tensions — dealing another blow to farmers already coping with high costs stemming from pandemic-related supply chain issues.

They have little choice but to pay the higher prices.

“You can’t skimp on the inputs,” Frischhertz said. “If you skimp on the inputs, you’re not going to have a crop, period. You won’t be profitable at all.”

Production costs in Louisiana could go up by as much as 40% this year, depending on the crop, said Michael Deliberto, an LSU AgCenter economist.

With markets reeling with uncertainty over Russia’s recent invasion of Ukraine, the economic picture for farmers has changed quickly — and could continue to do so.

“Production costs that were $350 an acre in late December and early January are now $400 or $420 an acre,” he said. “In just three months, fuel prices have gone from $2.80 to $4 a gallon for off-road diesel.”

Rising diesel prices will hit rice producers especially hard, he said. They not only fuel their tractors with diesel, but also tend to irrigate their crop with diesel-powered pumps.

“For every 10-cent increase in the per-gallon price of diesel fuel,” Deliberto said, “a rice grower can expect to spend an additional $4.53 per acre for their crop, a cotton producer can expect to spend an additional $2.30 and a corn grower can expect to spend an additional $1.74.”

If high diesel prices persist, sugarcane farmers will be in for a pricey harvest season — especially if weather conditions complicate field operations. Harvesting cane consumes more fuel than any other Louisiana crop, Deliberto said.

Corn farmers will suffer the most from high fertilizer costs; nitrogen fertilizer is critical to achieving good corn yields. Producers who typically spend about 35% of their operating costs on nitrogen may see fertilizer eat up half their budget this year, Deliberto said.

While it’s not enough to make up for high input costs, the Russia-Ukraine War is driving up commodity prices, offering farmers a small amount of relief.

Russia and its ally Belarus are major exporters of nitrogen, phosphorus and potassium fertilizers — supplying more than 40% of crop nutrient needs in Brazil, a top producer of soybeans and corn, Deliberto said. Brazilian farmers, who also are contending with a drought, are scrambling to locate fertilizers, further increasing commodity prices.

Ukraine accounts for about 17% of global corn exports, and Russia and Ukraine together export about 30% of the world’s wheat supply, Deliberto said. It’s possible that the U.S. and other countries may be able to pick up some of those export sales as the war evolves.

“Higher commodity prices are a help and can be a part of the solution to this problem,” Deliberto said. “However, commodity prices are not going to rise so that they can fully offset and allow a producer to absorb a 30% to 40% increase in overall production cost.”

Back in Iberville Parish, Frischhertz is looking for ways to shave off costs and hoping small changes will add up. He’s keeping a close eye on GPS monitors to avoid overlapping passes through the field and reaching out to different suppliers to get the best price on products.

“A sharp pencil makes more money than a sharp plow when it’s all said and done,” he said.

Nevertheless, he is preparing for a challenging season. Consumers may be paying more at the grocery store and gas pump, but they should not assume farmers are benefitting, he said. Farmers don’t price their own crop; markets do.

“It makes it tough for the farmer because there’s no way up,” Frischhertz said. “The price is what the price is.”

3/15/2022 6:54:35 PM
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