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Business & Economics

Inflated agriculture input costs impact South Dakota farmers

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Courtesy photo
Gregory farmer, Greg Eliason

It takes more than seed to grow an acre of corn. And supply shortages of fertilizer and herbicide mean prices for 2022 agricultural inputs have more than doubled. These inflated input prices are impacting farmers as they plan for the upcoming growing season.

And when it comes to caring for his crops, farmer Greg Eliason says even though input costs are up this year, he will still buy what the plants need to give them the best chance if the weather does cooperate in 2022.

In a career where income relies heavily upon cooperative weather, there are only a few things farmers can count on. Greg Eliason farms near Burke.

“The only guarantee farmers have is that we got to pay our rent and we got to pay our bills. There’s no profit guarantee. So, it makes it tough, especially with these fluctuating inputs,” Eliason says.

Rosebud Farmers Union Cooperative is responsible for securing enough fertilizer, herbicide and other agriculture inputs for Eliason and nearly 450 other farmers in a 60-mile radius of Gregory and Fairfax, South Dakota. Jonny Combs is the agronomy manager there.

“It’s went up probably over double, so it’s definitely shot up a fair amount… right now, it’s kind of way out of perspective because urea is up closer to $800-per-ton-plus. The corn price isn’t nearly that, currently. So right now, it’s probably not very affordable, you know compared to the corn price,” Combs says.

Urea is the most common form of nitrogen fertilizer farmers apply to corn acres. When Combs purchased it for farmers to apply growing season 2021, it cost the cooperative about $300-per-ton.

Looking ahead to the 2022 growing season, the $500-spike in fertilizer prices has farmer Greg Eliason putting pencil to paper to figure out how he can turn a profit in 2022.

“I blew my whole 2022 budget just on starter fertilizer. That was my whole budget for the whole year - for everything. And I spent it all with these high fertilizer costs just getting the corn started next year. So, it’s a big impact,” Eliason says.

And while he knows what it will cost him to raise an acre of corn in 2022, because he does not yet know what he will get paid for that corn, he is not going to expand his corn acres.

Planting more acres to crops like soybeans which require less fertilizer is a growing trend says commodity broker and Britton farmer DuWayne Bosse.

“Talking to different brokers across the country, it sounds like almost every state is kind of leaning the same way I am, if we have to plant more soybeans that’s ok. But of course, this talk should put pressure on the soybean market eventually too. And it will,” Bosse says.

Because urea is a derivative of natural gas. Bosse explains that the dramatic price hikes for urea are connected to natural gas supply issues.

“It’s just a lack of supply. Natural gas prices skyrocketed up because the rig counts, the active rig counts really dropped after COVID, because there just wasn’t the same demand for natural gas. And evidently it takes more time than any of us realized to fire them back up,” Bosse says.

Pre-COVID-19 Bosse says there were more than 100 rigs producing natural gas. That number dropped to about 20. Today, Bosse says there are 60 rigs producing natural gas.

Supply shortages are also behind the nearly 300-percent price hike for Roundup. Roundup is the brand name for glyphosate, an herbicide used to keep weeds under control in corn and soybean fields.

“It makes us nervous. What’s the point of pouring all these inputs in if you’re just feeding the weeds and you can’t kill the weeds?” Eliason asks.

The pressure facing the farmers he serves is not lost on Jonny Combs as he procures 2022 inputs.

“I mean we always try to make the best move for our farmers and take care of our farmers. This year especially, if there is going to be shortages in fertility, and Roundup’s really getting tight. Pretty much what that means is we’re going to try and make the best move and save our farmers money. And if it comes to where we have a shortage on chemical, we will probably just going to take care of our loyal customers,” Combs says.