Farmers expect new challenges as costs rise

By Ryan Breslin

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    MURFREESBORO, Tennessee (WSMV) — On Hutchinson Farms in Rutherford County, it takes a lot of energy to produce a crop.

They raise corn, soybeans, wheat, and commercial hay in Middle Tennessee but to get those seeds in the ground, initial input costs are needed on things like fertilizer, fuel, and other chemicals.

“Not only have they exploded in terms of price but they’ve also sometimes become pretty hard to get our hands on,” says farmer owner Will Hutchinson.

Hutchinson and his sister, who primarily run the farm, are fourth generation farmers.

While every year can be different, Hutchinson said this one will be especially unique.

“We’ve got a lot of macroeconomic pieces that are shoving a lot of rapid changes down our throat really quick and it’s hard for us to adjust in a timely fashion,” he said.

Those changes include geopolitical issues like the Russian attacks in Ukraine, unpredictable weather with drought affecting the growing season in South America, and a trucking industry under pressure.

Farmers are also having issues getting parts for broken equipment and they took a hit when the chip shortage happened after the Japan factory fire since a lot of their vehicles have computers in them now.

“It’s kind of a perfect storm of events and current outlook is expect more of the same.” He continued, “It’s going to be a wild ride this season.”

Hutchinson explained that when it comes to Ukraine, the country is a tremendous producer of agriculture products. “So we have a tremendous piece of the global food supply chain that’s not going to be potentially under a lot of pressure to provide what they have historically provided to the global market.”

Because of that, he said US producers will have to step up to answer the call for the global food supply this year.

But that’s as costs skyrocket and the rate of change in the market becomes a concern.

“As information travels faster and faster with technology it just drives that much more volatility in our markets. For a little bit of frame of reference, I said that a 50-cent movement in a week was a big week for us. Our wheat market moved over $3 last week. So, it’s this extreme volatility and this rapid rate of change that is hard for us to stomach. It’s hitting us at a time of year when we do have some options, but it ups the ante quite a bit.”

Back in December, the American Farm Bureau Federation already said fertilizer prices are the main concern for farmers as costs account for about 15% of total cash costs. When comparing to September 2020, they said all production nutrients have gone up.

Ammonia has increased 210%, liquid nitrogen has gone up 159%, Urea is up 155%, MAP has climbed 125%, DAP is up over 100%, and potash is up 134%.

With those numbers being from December, the Tennessee Farm Bureau said the prices are likely even higher now given the Russian invasion.

These high prices along with fuel costs climbing could mean disaster for farmers this year as fuel prices will be a big factor in this year’s crop budget.

Hutchinson said, “In the event that we have either a drought where we can’t meet production goals or if the market turns around mid-summer for some reason, then we’re going to be faced with the issue of extremely, historically high input prices and either no production to sell or production to sell at a deflated price.”

While Hutchinson said it may be several months for this to hit home in the grocery store as global agriculture is under severe pressure.

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