Study: Crop Production Costs will Increase Dramatically Next Year

Soaring fuel prices will  cause a dramatic increase in crop production costs next year, according to a University of Illinois (UI) study. Because of spiraling fertilizer prices, Gary Schnitkey, an agricultural economist from UI, estimated that the costs for soybean and corn production will jump by about a third. 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. Schnitkey expects fertilizer prices to surge 82 percent for corn and 117 percent for soybeans.

According to the study, farmers will also see hefty cost increases next year for inputs ranging from seed to fuel for tractors and other machinery. The study projects non-land production costs for corn will total $529 an acre next year, an increase of 36 percent from 2008 and nearly 85 percent higher than the average of $286 per acre from 2003 to 2007. Soybean input costs, on the other hand, are estimated to rise 34 percent from last year’s at $321 an acre.

Read the complete article at http://www.news.uiuc.edu/news/08/0723costs.html.  For more information, contact Gary Schnitkey at schnitke@illinois.edu