By Frank Giles and Clint Thompson
Inflation has touched consumers and businesses across the spectrum in the United States. It has been particularly problematic for farmers trying to remain profitable in a business where margins are tight.
“Inflation is a very concerning problem and has impacted all of agriculture in a significant way,” said Tony DiMare, president of DiMare Fresh. “Since COVID, we have experienced a 25% to 30% increase in growing/producing costs. Just about every single input item has gone up since the pandemic. In addition, some input items have gone up significantly since the two wars abroad started. The tariffs that were imposed on some of our inputs such as fumigant (from China) and fertilizer components also had a dramatic effect on price increases.”
DiMare was referencing the Russia-Ukraine war, which has risen natural gas prices, and the Iran war, which has increased oil and fertilizer prices.
“Oil is a major component of a lot of our inputs we use in agriculture, including fertilizer, chemicals, the diesel fuel we use for our tractors and irrigation pumps, plastic mulch, etc.,” DiMare added.
Lewis Taylor Farms, based in Tifton, Georgia, has seen similar challenges on the inflation front. The farm produces a variety of vegetables on more than 5,000 acres and has packing facilities and greenhouse operations. Jessica Kirk, vice president of operations for the company, said rising production expenses are not matching up with prices paid for what the farm grows.
“Inflation has affected the prices that we pay for everything from boxes and straps to fertilizer, seed and fuel,” she said. “At the same time, we have not seen the increase in sales prices. Sales prices have remained for the most part stagnant or lower. The prices that we are seeing at the grocery store do not reflect the prices we are paid.
“Since the beginning of the year, we have seen a 35% increase in diesel costs and fertilizer. We have seen about a 38% increase in boxes and another 12% to 15% in plastic. Labor increases are at 32% since 2022.”
Kent Hamilton, chief executive officer of Southern Valley Fruit and Vegetable in Norman Park, Georgia, echoes what growers are saying about skyrocketing expenses. And he added this is not a new phenomenon.
“Our input costs have just gone wild since COVID,” Hamilton said. “We’ve got hit hard from every angle.” He noted that his business lost money in 2021, 2022 and 2023.
Hamilton added that sometimes rising production expenses can be hard to plan for in farming. Prices paid for inputs are volatile and will impact profitability, even when you have a good handle on what to expect pricewise for a crop.
“We’re busy out there working, trying to produce a crop and maybe not paying as close attention to the numbers as we need to be,” Hamilton said. “We were selling stuff at below production costs part of the time. So, it’s been hard to get a handle on it to know exactly what our costs are and where we need to be. And to the retailers, they didn’t want to react to the increase in costs. They were slow to increase their prices or at least increase what they were paying to the farm.
“A lot of what we sell is on annual contracts. So, we know normally before we plant what we’re going to get for the crop. And if our yields are off, then more than likely we’re not going to be profitable. If our yields are good, then it should be good. But these increases in costs have hurt us badly.”
Blunting the Impact
While market forces are largely out of growers’ hands, there have been efforts made to address inflation on the farm. In December, the Trump administration announced the Farmer Bridge Assistance Program, which included $12 billion in direct farm aid payments. From that total, $1.6 billion was allocated to the Assistance for Specialty Crop Famers Program. It targets the 2025 growing season and is administered by the U.S. Department of Agriculture (USDA) Farm Service Agency using Commodity Credit Corporation authority. It is explicitly a short-term bridge payment.
The aid provides financial relief to offset:
• Elevated input costs (labor, fertilizer, fuel, etc.)
• Market disruptions
• Persistent inflation
• Losses from unfair trade practices by foreign competitors limiting exports
The Specialty Crop Farm Bill Alliance welcomed the aid but noted it was insufficient relative to needs. The alliance has advocated for additional dedicated funding in the $5 billion range.
In July, U.S. Secretary of Agriculture Brooke Rollins announced the Fertilizer Investment and Expansion for Long-Term Domestic Supply (FIELDS) Program. According to USDA, FIELDS is intended to expand or bring into operation new, independent domestic fertilizer production capacity in order to provide agricultural producers with additional domestic fertilizer options and strengthen the U.S. fertilizer supply chain. Program funding (up to $500 million) is intended to support projects that significantly increase domestic process manufacturing capacity and fertilizer availability, including expansions or upgrades of existing facilities, construction of new domestic production facilities, shovel-ready projects capable of rapidly increasing domestic supply, and on-site fertilizer terminals and transportation infrastructure that improve supply-chain efficiency.
“A strong domestic fertilizer industry is essential to a strong agricultural economy,” Rollins said when the program was announced. “This investment will help ensure American farmers have access to a secure, reliable and domestically produced fertilizer supply for generations to come.”
More short-term action was announced with the temporary suspension of countervailing duties on phosphate fertilizer imports from Morocco (announced June 29). This emergency proclamation suspends anti-dumping and countervailing duties for up to eight months (or until the emergency ends). It aims to boost supply from a major global producer, with USDA estimating a ~22% reduction in phosphate fertilizer prices and ~$1.82 billion in annual savings for farmers.
Global fertilizer, chemical and seed companies have faced pressure from growers, and litigation in some cases, to bring down prices for critical crop inputs. While those calls have not yielded much, recent price declines for nitrogen products like urea-ammonium nitrate and anhydrous ammonia stem mainly from global supply recovery, resumed exports from China, and U.S. policy actions like the Morocco duties suspension.
The growers interviewed for this story noted that the end of global conflicts in Ukraine/Russia, and especially in Iran, could help to bring prices down.
“One remedy would be to end the conflict with Iran and the blockage of the Strait of Hormuz to allow the oil tankers to flow unrestricted,” DiMare said. “The obstruction of the Strait has caused major disruptions with oil supplies and has caused oil prices and oil-based derivatives to spike in price.”
Positive News on the Labor Front
With labor accounting for one of the largest portions of most specialty crop growers’ production expenses, the recent announcements regarding the H-2A wage rate were welcomed news. In October, the U.S. Department of Labor announced a new interim final rule that modifies the methodology for calculating the adverse effect wage rate (AEWR). The new rule introduces two skill-based wage categories within each occupational classification to account for differences in duties and qualifications, ensuring fair compensation while providing flexibility for employers. Additionally, H-2A employers who provide housing will be eligible for a downward adjustment in their AEWR.
This summer, House Agriculture Chairman G.T. Thompson (R-PA) introduced the Securing Agriculture’s Workforce Act. The act would limit annual AEWR increases to a maximum of 3.25%. It would also shift paperwork to a single, streamlined online portal. And it would reduce “compliance drag” and legal hurdles through simplified rules.
“Labor increases on our farm are at 32% since 2022,” Kirk said. “We are going to see some relief though in this area, hopefully. I met with Secretary Rollins in January to discuss H-2A costs and increases. After our meeting and lots of pushing from the Georgia Fruit and Vegetable Growers Association and other commodity groups around the country, they are finally changing how the rate is calculated to help us some.”
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