By Clint Thompson
Budgeting has emerged as a significant management tool for specialty crop producers. If growers hadn’t implemented the practice before COVID-19, most certainly are now during an era of unpredictable input expenses and price fluctuations from one month to the next.
Wendiam Sawadgo, Auburn University assistant professor and Extension economist, outlines the importance of farmers utilizing this important tool.
“I think now with high input prices, nitrogen, other fertilizers, fungicides, insecticides; they are just through the roof. Knowing how much you’re spending on each of those categories is good,” Sawadgo said. “Combining budgeting with other tools like soil testing to make sure you have the right nutrients can really be useful. If you combine all of those things, you can see exactly how much you can save on a per-acre basis or per-plant basis. See how much those added costs are affecting the bottom line.”
Input costs are at an all-time high, especially with diesel. Prices average $5.71 in the U.S., an increase of $2.43 over the previous year, according to the U.S. Energy Information Administration on Monday. Growers are now more cognizant of the expenses they are paying for.
“I think a lot of people now see the importance. When output prices are high, but input prices are low, a lot of people can make profits in agriculture. Losing a little bit of money here and there doesn’t hurt them quite as much,” Sawadgo said. “Now we do have the high output prices, but input prices are really high. That’s squeezing those profit margins. A lot of people are really seeing that budgeting is a really an important tool to make it through times that are either where we are today or potentially worse than where we are today.”
It is also a challenge to plan for a profit amid volatile market prices.
“You’re putting all of this money toward a crop but you’re not sure how much you’re going to get out of it. That’s our biggest challenge this year especially,” he added.
