ANDERSON, Indiana — Even before war broke out in the Ukraine, farmers were facing uncertainty related to the upcoming growing season.
Prices for commodities that they need to plant and grow crops have fluctuated wildly for most of the winter, but soon after Russian troops crossed the Ukrainian border, prices for corn and wheat — crops that both countries hold a significant share of exports in — spiked. Corn traded last week at $6.81 per bushel, an 8.4 percent increase, according to the Chicago Board of Trade and Intercontinental Exchange.
“It’s far and away the most expensive corn and soybean crop we’ll ever plant as far as cost per acre,” said Brian Bays, who with his brother and nephews farms about 4,000 acres in and around Anderson.
Like other industries, Bays and his counterparts have been dealing with a host of challenges as the pandemic subsides, from worldwide supply chain disruptions to sharp increases in fertilizer and fuel prices. Inflation and pent-up demand are also driving prices higher, according to some economists.
But the war in Ukraine has added another layer of volatility to the markets, and farmers are facing increasingly complex decisions in nearly every part of their operations. Some wonder if they’ll be able to fulfill obligations under contracts signed for 2022 during the harvest last fall.
“When you see beans go up 20, 30, 40 cents in a day and then go down 40 to 60 cents another day, it’s hard to figure where we’re at,” said Mike Shuter, owner of Shuter Sunset Farms, a fourth-generation family farm specializing in corn, beans, cattle and pork production in Indiana. “Decision making is not getting any easier.”
Shuter noted that input prices — which include costs for planting and maintenance necessities like fertilizer — have nearly tripled in the last year.
“You’ve got to balance making sure you get the best prices you can out of these commodities because your input prices are so high right now,” he said.
With planting season approaching, some farmers have switched their planned crops in an effort to mitigate costs. According to the United States Department of Agriculture, soybean acres across the country are expected to rise by about 4 percent. That trend, economists say, should save farmers some money on fertilizer. But other experts say those measures will have only a modest effect on overall costs.
“There’s high demand and low supply, which equates to higher prices,” said Bob White, director of national government relations for the Indiana Farm Bureau. “It’s a fear game at this point when it comes to the marketplace. Markets like slow, steady information. They don’t like any jolts, and what we’ve seen over the last several weeks is a tremendous jolt to the world market system.”
In Bays’ view, the chances for a successful growing season — and for at least a minimal profit — hinge on commodity prices, which are approaching record highs. If they remain high, he said, that would help offset record input prices.
“If commodity prices would collapse, then we’re caught in a pretty bad cost-price squeeze,” Bays said. “We believe commodity prices will stay relatively strong, but no farmer that I know of — it would be very rare that they would price 100 percent of their crop or even 50 percent at this point in the season, because we haven’t planted, and there’s risk.
“Once we make a commitment, we have to deliver those bushels, so it does get pretty complicated,” he added. “This is definitely one of the wildest times that I’ve ever seen in my life.”
White said the American Farm Bureau has been lobbying the International Trade Commission to examine tariffs applied to fertilizer products and other imported supplies and consider suspending those tariffs — similar to a gas tax holiday — as another avenue for potential savings.
“They‘re doing things, but there’s not one big silver bullet,” he said. “They’re doing a lot of little things that could help us out.”
Follow Andy Knight on Twitter @Andrew_J_Knight, or call (765) 640-4809.
