Apart from rising labor costs, fertilizer and fuel prices have been climbing for months, showing no bounds. He says his profits are down 10% to 15% this year, and 2022 could be worse.
“It comes right out to the bottom line,” Jones said. “If you double the cost of something, you can’t just double the harvest.”
“My price is staying the same, or less,” Jones said of his sweet potato.
toll on farmers
“Farmers are price takers, not value makers,” said Patty Edelberg, vice president of the National Farmers Association. “People are paying a lot in the shops, but what farmers are getting has largely remained the same or has become too volatile… the middleman is actually making a profit on it.”
In many cases, Adelberg said, the processors and distributors who get food from farm to store shelves are currently passing along their increased costs to consumers. The USDA has also confirmed this. Many of those companies are dealing with their own supply chain problems, with goods and materials still stuck on cargo ships and a shortage of workers and truck drivers driving up wages and costs.
According to the American Farm Bureau Federation, most turkey farmers signed sales contracts for this Thanksgiving in the spring, but are now being squeezed by the same input costs as other farmers.
Senior economist Veronica Nigh said, “The increases we’ve seen in feed costs, fertilizer costs, transportation and gasoline — the farmer is paying all those increased costs, but locked into the price they get for their turkey. ” in the American Farm Bureau Federation.
rising operating costs
“To some extent, we are still trying to pay for the uncertainty in the market,” said Trey Malone, an agricultural economist at Michigan State University. “We are in the midst of a perfect storm of unique developments in agricultural production.”
Malone says farmers should be prepared for several months of high costs on a vast range of inputs, including pesticides, seeds, fertilisers, fuels and labor. He said that even the farmers are getting higher prices for their crops now, but rising operating costs are causing them trouble.
In early November, Purdue University’s Ag Economy Barometer, which surveys US farmers, found that farmer sentiment weakened for the third month in a row, reaching its lowest level since the early months of the pandemic, largely was driven by rising input prices.
Some farmers are stocking up on costly material in case the suppliers run out. Others are waiting, hoping for a drop in prices.
Soaring supply chain prices on top of already rising labor prices in recent years threaten Matt Alvarnaz’s California sweet potato farm. He says the family farm typically generates profits of more than $100,000 a year, but could lose between $80,000 and $120,000 this year. And the cost is only getting higher.
“We could potentially lose a quarter million dollars next year,” Alvarnaz said. “We won’t have enough cash to take on next year to operate our operating debt.”
Farmers have gotten used to the instability, and both Alvarnaz and Jones are now looking for ways to adapt, such as reducing or relocating to other crops.
“It’s going to worry you, but I won’t let it get me down. We’ll survive,” Jones said. “We need to get a fair price for what we’re growing.”