Production costs for farmers in the Bayou State could go up as much as 40% this year, depending on the crop. LSU AgCenter Economist Mike Deliberto, said the market volatility is due to a number of issues, like supply chain disruptions and the availability of herbicides…
“But a big driver to the year-over-year production volatility from an input side of things, is related to the fertilizer and fuel markets,” said Deliberto.
He said both of those markets follow the price of crude oil and natural gas.
And while the Russian invasion of Ukraine is impacting consumers at the gas pump, Deliberto said farmers are also facing sticker shock and the expenditure of fertilizer makes up a large portion of their expenses which is being affected by trade sanctions.
“Other major competitors, like Brazil who rely on Russia for almost forty-something percent of their fertilizer it will affect them differently than it will affect us,” said Deliberto.
And as consumers are paying higher prices for groceries, Deliberto said only 12-cents from every dollar on retail food sales comes back to the individual farmer and the increase at the grocery store is paying for transportation, advertising, and marketing.
“And really the price that the producer receives really doesn’t go up in magnitude as much as what we see on the grocery stores shelves,” said Deliberto.
As for Louisiana farmers, Deliberto is hopeful higher commodity prices and sound marketing strategies will help offset the price increases of fertilizer, pesticides, and herbicides.
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