According to the latest Ag Economy Barometer released Tuesday, supply-chain disruptions continue to “haunt the nation’s agricultural sector,” with four of every 10 large-scale farmers and ranchers reporting difficulties in buying inputs ranging from fertilizer to farm equipment parts, according to the Purdue University survey.
Some 57% of the largest U.S. farmers – the group surveyed for the monthly barometer – said they expect input prices to rise by at least 20% over the next 12 months, 10 times the usual annual increase. In the Purdue survey from last year, 55% of respondents expected input prices to rise at least 12% over the next year.
“Supply chain issues continue to haunt the agricultural sector,” said economists James Mintert and Michael Langemeier, who oversee the barometer. “Forty-five percent of respondents said that tight farm machinery inventories impacted their machinery purchase plans and 39% of producers in this month’s survey said they’ve experienced difficulty in purchasing crop inputs for the 2022 crop season.”
Responses to a follow-up question about obstacles in buying inputs “were quite varied, indicating there are problems across the supply chain with farmers reporting difficulties in purchasing fertilizer (31%), herbicides (28%), farm machinery parts (24%) and insecticides (17%),” wrote Mintert and Langemeier.
The fall and winter saw fertilizer prices rise dramatically. At the same time, congestion at ports created fears that supplies might not arrive on schedule. According to the USDA, farm production costs will rise by 8.3% in 2021. Analysts anticipate that farm production expenses will rise this year, but farm income will decrease due to a softening in commodity prices and the expiration pandemic relief programs.
The Purdue report didn’t indicate what percentage of producers have difficulty purchasing inputs from their suppliers. As the economy recovers from the 2020 pandemic recession that caused widespread panic, fears about price increases and shortages have grown.
Nearly half the large farmers who participated in the Ag Economics Barometer stated that their biggest concern this year was the rise in input costs.
Inflation has been an increasing concern among farmers since last fall. In September and October, just one third of producers expected input prices to rise by more than 12 percent over the next 12 months. Nearly two thirds of the producers now anticipate price increases exceeding 10%.
Purdue conducted its survey of producers from Dec. 8-14, overlapping the Labor Department report on Dec. 10 that the U.S. inflation rate was 6.9%, the highest since June 1982.
The Ag Economy Barometer is based upon a telephone survey of 400 producers with annual production exceeding $500,000 per year. According to USDA data, the largest 7.4% U.S. farms make more than $500,000 annually. It has a margin for error of plus or minus 5 percent.
The homepage for the Ag Economy Barometer is available here.
Source: Successful Farming