A significant number of America’s biggest farmers expect this year’s sharp increases in the price of fertilizer, pesticides and machinery parts to continue in 2023, said Purdue University on Tuesday. Three of every four producers polled for the monthly Ag Economy Barometer said they expected farm input costs to rise by at least 20 percent this year, while more than one-third said they expected 2023 crop input prices to be at least 10 percent higher.
“It is hard to overstate the magnitude of the cost increases producers say they are facing,” wrote economists James Mintert and Michael Langemeier, who oversee the barometer. “Forty-two percent of producers chose higher input costs as their biggest concern, which was more than twice as many who chose government policies (21 percent) or lower output prices (19 percent).”
Although farm inputs costs increased by an average 1.8 percent annually in the past decade, participants in the Purdue survey said high inflation was the rule now. Some 75 percent said farm inputs would cost at least 20 percent more than in 2021; 46 percent said the increase would exceed 40 percent.
Looking to 2023 crops, 15 percent said they expected input costs would be up by 10-20 percent and 21 percent said the increase would exceed 20 percent. The poll is targeted at the largest grain and livestock producers in the country.
“Crop input challenges extend beyond their inflated costs to their availability,” the economists said. In the latest poll, 34 percent of producers said they had difficulties in purchasing inputs for 2022 crops, a 7-point increase from the previous month. Eleven percent of producers said they had received notice from a supplier that inputs already purchased would not be delivered.
The barometer, a gauge of the health of the agriculture economy, had a reading of 121, up 8 points from last month but 32 percent lower than a month ago.
The Ag Economy Barometer is based on a telephone survey of 400 operators with production worth at least $500,000 a year. Producers were contracted from April 18-22. USDA data say the largest 7.4 percent of U.S. farms top $500,000 in annual sales. The barometer has a margin of error of plus or minus 5 percent.
The Ag Economy Barometer is available here.