Area farmers feeling increase in labor, fertilizers costs
Published 11:48 pm Sunday, January 13, 2008
VIDALIA — The public may be noticing that prices for many products seem to be on the rise, but many farmers are feeling the pinch when it comes to the cost of production.
Some costs, like labor, have gone up because of an increase in the federal minimum wage, and some, like storage, are affected by the price of fuel, Vidalia farming consultant Cecil Parker said.
But still others, like the price of chemicals and seeds, are affected by their relationship with something as simple as fertilizer.
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“Basically when the cost of the fertilizer goes up you’re going to have an increase in the cost of chemicals and seed,” Parker said. “They generally have an increase 3-5 percent a year.”
And the cost of fertilizer has dramatically increased recently.
“The cost of fertilizer has gone up tremendously, probably 30-40 percent from last year,” Parker said.
The increase in fertilizer costs can be explained in part with simple international market economics, Mississippi State University Nutrient Management Specialist Larry Oldham said.
“With the increase in grain prices there is some interest in other countries about growing crops that require more fertilizer,” Oldham said.
But there is also a relationship between the cost of natural gas and nitrogen based fertilizers.
“Almost all nitrogen fertilizers are derived from natural gas,” Oldham said. “The gas is processed into anhydrous ammonia, which can be used as fertilizer itself and can also be processed into other fertilizers.”
Because the U.S. imports a lot of fertilizers, international incidents can also bring about an increase in prices.
“There was an incident in October where train derailed in Russia and that caused a disruption in Mississippi,” Oldham said. “We’re at the mercy of all these market forces that are happening in the bigger world.”
But Oldham said some of the costs associated with fertilizer could be saved if farmers just make their fertilizer decisions based on a recent soil test.
“If you don’t need it you are impervious to the price fluctuations,” he said.
For Parker, the fact that grain markets are still good will help offset some of the cost increases in production.
“When it’s all said and done, you’re not making hands full more, but your profit potential is better,” he said.