By Clint Thompson
Various factors have contributed to the increase in costs for fertilizer and other energy-based inputs. A surge in post-pandemic demand combined with transportation delays, low crude oil inventories and the current Russia-Ukraine conflict are the main reasons, according to a report from the U.S. Department of Agriculture (USDA) Economic Research Service.
Nitrogen fertilizer is up 110% from this time last year. Diesel fuel is up 100%. Gas is up 96%. Potash/phosphate is up 70%. Building materials are also up 21%.
The U.S. accounts for about 20% of all global potash import volume with Canada sourcing the most. However, Russian and Belarus accounted for 37% of exports in 2019. Sanctions on their movement could impact the potash market in the future.
Nitrogen fertilizer expenses this year could eclipse the average of the previous five years. The USDA, National Agricultural Statistics Services phosphate and potash price index is expected to increase by 66% from the 2017-20 average.
Chemical prices are expected to increase this year, led by fungicides. Low product inventories, high transportation costs and tight labor markets will contribute to the largest price increases in nearly a decade.
Farm machinery expenses are also expected to rise at least 10% this year after rising 7% in 2021.
According to the U.S. Energy Information Administration, gasoline prices were an average of $4.10 on April 25, an increase of $1.23 from the previous year. Diesel prices were $5.16, an increase of $2.03 from last year.
Vegetable producers have paid the price for the sharp spike in input costs. Growers paid at least 16% more for the inputs needed to produce, pack and ship vegetables during the first quarter.
Labor expenses are another critical factor for vegetable farmers. Wage rates increased by nearly 6% in 2021 and are projected to rise again in 2022.
