Rising Input cost

Farmers are practicing caution with their 2023 planting decisions due to rising input costs.
Despite rising crop prices, higher operating expenses are rapidly eating away at most of
their profit margins. Some of these expense increases include fertilizer (up 80%),
herbicides (up 28%), and farm machinery parts (up 24%). On top of all of those, energy
price fluctuations also remain a top concern. They may be falling one month, but rise the next.

Each of the double-digit input price increases drastically affects each farmer’s break-even costs.
With a tight supply chain and no end to the current high global demand in sight, these increases
could very well persist beyond 2022. Due to the nature of producing and selling commodity
products, farmers don’t have the flexibility to simply raise prices on their crops in proportion to
their rising costs. As long as there are any other farms able to sell the same crop for less,
all farmers must meet that expected market price in order to sell their harvest, regardless of
whether they make a profit or not.

Continuing to do business in a commodity market means that to navigating these input cost
increases and obtaining flexible land rental agreements, optimize their fertilizer expenses, and cut any others line-item costs. They will have to be particularly business-savvy in 2023 to stay in business. Being a farmer
in today’s market requires creative solutions to persist survive through what is becoming a more