Archive for Tuesday, April 26, 2011

Praying for rain

April 26, 2011

Like all Americans, Kansans are paying higher prices for their food. Attribute this rise in costs to Mexican freezes or tight supplies in the pork market; still, we're all digging deeper into our pockets to pay for our next meal.

As a result, consumers should reconsider their grocery budgets to account for a 3-4 percent increase in food prices this year, according to the Consumer Price Index.

These increases impact all consumers' grocery bills including farmers and ranchers are consumers. They too understand the pressure Kansans are feeling in the check-out line.

This nation's food producers also are taking a hit with production costs. Any Kansas farmer/rancher will tell you his/her input costs are soaring.

Fertilizer prices have doubled. Edwards County farmer Darrell Wood paid $190 a ton for liquid nitrogen fertilizer in 2010. The same 32-percent liquid nitrogen is selling for $416 a ton or higher today.

Diesel fuel sold for $2.50 a gallon last year and $1.80 a gallon in '09. As I write this, it was selling for $4.11 a gallon but seems to be going up by the hour instead of the day.

Will the cost of fuel double?

"Thank goodness corn, bean and wheat prices are strong," Wood explains. "But even with these high commodity prices, everything has to click just right."

That means buying inputs in bulk, months in advance while marketing your crops or forward contracting at the optimum time to lock in a profit.

Even that can be incredibly risky in today's economic climate, Wood says.

"A neighbor of mine contracted his wheat crop at 10-bushels-per-acre and $6 a bushel," Wood says. "He's worried he won't be able to grow enough wheat to fill his contract."

If the long-range forecasts are right, there may be little wheat grown in the western half of Kansas. With hit and miss showers bringing only 10 or 15 hundredths of rain, the wheat crop continues to deteriorate rapidly.

Wood believes his 1,000 acres of wheat will amount to a goose egg.

"I'm 55 and I've never seen anything like this," the Edwards County producer says. "We've had 30 hundredths (rain) in the Trousdale area since the middle of November."

But it's not just the dying wheat crop Wood is concerned about. He's going full throttle planting 6,500 acres of irrigated corn and at the same time irrigating the corn ground in front of the planter.

Without pre-irrigating his corn ground Wood didn't believe the crop would have enough moisture to germinate and have the start necessary to weather the dry conditions. It will cost him an additional $25,000 in fuel to apply one inch of moisture to his corn ground before planting.

This doesn't bode well for the upcoming irrigation season either.

"If we're going to have to put on water like I think we are this summer, producers are going to have to over pump to keep up with the dry conditions," Wood says. "We've got to receive help from Mother Nature."

This isn't the first time nor will it be the last Wood and his fellow Kansas farmers are faced with drought, disease, hail and other weather conditions they cannot control.

"It's part of farming," Wood says. "You have good times and bad."

And what happens on the farms and on the fields in Kansas and across this country impacts the cost of food consumers buy in their neighborhood groceries.

Extremely dry conditions coupled with rising fuel prices affect every stop in the food production chain. It's the reality of farmers and ranchers paying more for basic business inputs including fuel, equipment and fertilizers that foster plant growth. Manufacturing and processing facilities also must account for rising fuel costs.

Eventually, food prices tend to level out and consumers can expect to pay only slight increases during the long term. As for the men and women who grow our food, they will hope and pray for rain so they can continue providing the fresh produce, grains and dairy products that stock our grocery shelves. With help from above, they will try to maintain profitable and lasting businesses.

  — John Schlageck is a leading commentator on agriculture and rural Kansas.

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