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Impact of Escalation in Fertilizer and Other Farm Costs

01/17/2022

The Agriculture and Food Policy Center (AFPC) of the Texas A&M University System recently published a report entitled Economic Impact of Higher Fertilizer Prices on AFPC Representative Crop Farms. The Center evaluated the effect of higher fertilizer prices on 64 representative crop farms located in the Southeast, Southwest, Pacific, Midwest and High Plains states. 

 

It was determined that producers of feed grains would incur an average additional cost of $128,000 per farm with a mean of 3,178 acres under cultivation assuming incremental fertilizer cost will exceeding $40 per acre.  Some farmers growing rice and cotton will incur higher per-acre costs. The Report concluded “Given that the farm safety net is not designed to address rapidly rising costs of production, there are growing concerns in the countryside about the need for additional assistance.” 

 

The fertilizer supply situation has been exacerbated by the invasion of Ukraine by the Russian Federation. Production of fertilizer and its components in Ukraine have been impacted by the war. Exports from Russia are subject to sanctions and restrictions.

 

The price of corn and soybeans, the major determinants of margins for eggs and poultry meat, are set by supply and demand. This prevents farmers from simply passing on additional costs to livestock and poultry producers.  Anticipated subsidies for row-crop farmers will ultimately be inflationary and add to the national debt.  Indirectly all taxpayers and our succeeding generations will contribute to the escalation in crop inputs including fertilizer.