Nearly every aspect of farm work has seen inflated costs
Between high fuel costs and price hikes at the grocery store, 2022 felt like a year of high prices.
On ag advisor says that when the books close at the end of the year, some major areas are sticking out after coming in over budget.
According to Thomas Eatherly with Pioneer Business, “Fuel was a big one. As we all know and saw firsthand, fuel costs rose tremendously, and as we’re trying out our numbers, overall, it looks like we will be around 8-12 percent over budget. And then there’s obviously additional factors depending on what graphical location your operation is located, as far as irrigation, grain drying, and trucking. Those are all major costs that can affect those numbers throughout an operation.”
He adds everything about a farmer’s operation has been inflated, including interest rates, crop inputs, and equipment repairs.
“Repairs, we originally budgeted about 15-20 percent overall increase of our budget year-over-year, and looks like we’re going to end up around 30 percent over due to supply chain shortages and cost of inflation. For the most part seed and fertilizer costs were locked in ahead of this year’s planting season. The bigger issues were the additional products that were added to the blends and availability of certain chemicals after we had already started. And then we have interest rates. Cash flow needs are increasing due to demand for locking in prepays at decent prices. We think this is probably the most expensive crop we’ve had on record in a long time, so farmers need to understand what the opportunity cost is for borrowing money,” Eatherly explains.
The group is encouraging producers to save some working capital next year and to operate on as much of their own money as possible. They say working smart and utilizing your own assets could pay off as producers look for different ways to make every dollar count.