Cost Crunch: Comparing input cost increases and inflation for soybean producers in Brazil vs. Illinois
Brazilian soybean producers are shelling out a lot more on input costs than U.S. farmers, according to a new study. However, while Midwestern producers are paying less for inputs overall, many of those costs are inflating at a faster rate.
Input costs take a toll on producers worldwide, but according to new data from FarmDoc Daily, the Brazilian agriculture industry may be paying up for inputs than producers in the United States.
In Brazil’s top producing state of Mato Grosso, total direct costs including fertilizer, seeds and storage for soybean production have increased from $274 per acre to $390 dollars since 2016. That marks a more than a 40 percent increase in the last seven years.
In comparison, average input costs for soybean producers in Illinois are about $95 less per acre than those in Brazil. However, U.S. producers have experienced an even greater inflationary spike overall, seeing input costs increase by more than 50 percent — from $186 dollars to $295 per acre — in the same time frame.
Breaking Down the Data: Fertilizer Costs
While U.S. producers might be experiencing more inflationary pressure than their South American counterparts in terms of all input costs, that is not the case for some individual costs. If you take a deeper dive into the data, fertilizer costs have increased much faster in Mato Grosso than here in the U.S.
The average cost of fertilizer for Brazilian producers was $88 per acre back in 2016. Now, fertilizer costs are reaching new heights in South America, coming in at $187 today — at more than double the price per acre (around 112 percent more!) than in 2016, Brazilian producers have shouldered about a 16-percent increase in fertilizer prices annually.
Fertilizer prices have seen a tandem rise in Illinois over the last seven years, but at a more modest rate. While U.S. producers are paying 94 percent more today for fertilizer than in 2016 — the price jumping from $49 to $95 per acre — they experienced an average annual increase of about 13 percent and today are paying nearly half the cost ($92 less per acre) of Brazilian producers to fertilize their crops.