California farmers spent a little more to bring in the harvest in 2012 says a new USDA survey. But that increase was small – up 0.5 percent – below the cost of inflation. Now there is strong indication that the costs of key components including feed are heading lower in 2014.
The USDA report, released Aug 8, says feed costs
were up 7.2% – largely due to the Midwest Drought and high corn prices. Feed costs were a heavy burden for all of California’s livestock and diary industry.
But farmers also paid more for fuel – higher by 7.1% in 2012.
The survey shows that other costs were lower in 2012 – like interest rates paid out on loans – down 24% from to 2011.
Farm services were also lower including components like insurance and custom harvesting – down 2%.
Farmers might be surprised to know that in 2012 their labor costs were flat. Machinery was less – like tractors that fell 5.8%. Truck expenditures were down as well.
Fertilizer costs fell 6.8% likely based on continued low natural gas prices.Now there is indication these prices will move lower on 2014. A new University of Illinois report predicts fertilizer costs that averaged $200 per acre in 2012 could be in the $125 to $150 range for 2014.That is in part due the collapse of a Russian cartel controlling potash prices. A Russian phosphate company – Uralkali exited a partnership agreement that controlled 43 percent of potash exports in late July.
Speaking of cartels, OPEC’s influence seems to be waning.
The US government is predicting lower petroleum prices for 2014 as well.Farmers are a big users of oil and particularly diesel fuel which was up 7.1% in 2012. On Aug 6 the US Energy Information Agency predicted diesel fuel that averaged $3.96 across the US in 2012 will fall to $3.92 in 2013 and $3.76 per gallon in 2014.
Looking on the feed side a big Midwest corn corp looks to dramatically reduce feed costs in 2014 with a 34% larger crop in store this fall. That could mean $4/5 corn compared to $7/8 a bushel last year, a huge break for livestock producers and dairy operators and likely all consumers food costs.Perhaps not celebrating will be the corn growers.