Published: October 16, 2009 10:06 pm      

Decreasing input costs

Farmers may see lower input costs in 2010

In the midst of harvesting season, farmers are looking ahead and considering input costs for next year.

Many of the needed supplies are purchased before Jan. 1 even rolls around.

According to Mark Kepler, the agriculture and natural resources educator at the Fulton County Purdue University Cooperative Extension office , some input costs are heading in the right direction.

“It depends on the different [products] you talk about, but some have dropped down,” he said.

At the top of the list is fertilizers.

Compared to a little over a year ago, Kepler said, the cost of fertilizers are lower.

Last winter, nitrogen prices dropped in half just in three days, he said. Potassium, which farmers spend a lot of money on, dropped some in the last month, as did as phosphorus.

“They are still on the high side, but not bad,” he said.

According to Purdue agricultural economist Bruce Erickson, farmers should expect to see the most savings on fertilizer costs during the 2010 planting season.

Erickson said some farmers were spending as much as $200 per acre to fertilize corn this year. He expects the cost to be as much as one-third lower in 2010, depending on soils and crop rotation.

Even though the cost of fertilizers have dropped, Erickson noted prices are still on the high side and have not dropped as much as commodity prices, which may lead farmers to tighter-profit margins for next season.

Kepler said tighter-profit margins in 2010 is absolutely possible.

“We went from $5 corn, about a year and two months ago, to $3 now,” he said.

He said corn prices fell when the whole economy crashed.

Another input costs farmers will have to keep an eye on is the price of seed.

Kepler said the with the amount of technology put into breeding and engineering seeds, the cost continues to rise over time.

“Corn now is yielding like it never has before,” he said. “What did Grandpa do? He would take the biggest ear of corn and plant that.”

According to Erickson, some technology fees and list prices of some of the newest hybrids have increased. However, he has also heard of some discounting.

As for fuel, prices have dropped from a year ago.

Kepler believes land value or cash rents should not increase this year and may even decrease slightly.

“All of this is related to the price of corn not being great,” Kepler said.

While looking to make the largest profits, Kepler said farmers will look to save money somewhere and it may be on machinery.

“Farmers will use old machinery and take the opportunity to update it,” he said. “What it amounts to, is when it gets tight they think maybe they can keep that machinery another year.

According to Erickson, because some farmers are not purchasing new equipment or are buying used equipment, the cost of new large equipment could actually be lower. He believes there may be good deals on new equipment.

To download a copy of the 2010 Purdue Crop Cost & Return Guide, which offers estimates of input costs and expected returns for the 2010 planting season, visit www.agecon.purdue.edu/extension/pubs/index.asp.

• Denise Massie is a staff writer at the Pharos-Tribune. She can be reached at (574) 732-5151 or denise.massie@pharostribune.com.