Jul. 24, 2008 at 10:32am
Soaring energy prices will yield sharp increases for corn and soybean production next year, cutting into farmers' profits and stretching already high food costs, according to a new University of Illinois study.
Costs to get crops in the ground will jump by about a third in 2009, fueled by fertilizer prices expected to surge 82 percent for corn and 117 percent for soybeans, said Gary Schnitkey, an agricultural economist who conducts the annual survey of input costs.
Fertilizer – the biggest non-land expense for corn and soybean farmers – is tethered to the same cost spiral that has driven steep gasoline and heating price increases over the last few years, said Schnitkey, a professor of agriculture and consumer economics.
"Roughly 80 percent of the cost of producing nitrogen fertilizer is natural gas, so as natural gas costs have gone up, so have the costs of those inputs," he said. "Phosphorus and potassium are mined, and as energy costs increase, mining costs increase."
Along with fertilizer, grain farmers also will see hefty cost increases next year for inputs ranging from seed to fuel for tractors and other machinery, according to the study.
The study projects non-land production costs for corn will total $529 an acre next year, up 36 percent from 2008 and nearly 85 percent higher than the average of $286 per acre from 2003 to 2007. At $321 an acre, soybean costs are projected to rise 34 percent from 2008 and more than 78 percent from the 2003-to-2007 average of $180 an acre.
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