Farmers’ costs to increase for 2019... | Michigan Farm News

Farmers’ costs to increase for 2019...

Category: Crops

by Farm News Media

Farmers-Costs_MFN_11.7.18
While the price of fertilizer, energy, seed and other expenses are expected to go up in 2019, don’t expect an offsetting increase in income.
The cost of producing a grain crop is expected to rise next year, but farm income is unlikely to increase, an agricultural economist with The Ohio State University has projected.

On average, farmer profits for next year will be “low to negative,” according to Barry Ward, an assistant professor in the College of Food, Agricultural, and Environmental Sciences.

He predicts the five-year trend of declining farm income nationwide will continue due to modestly higher fertilizer, seed, machinery, labor and energy costs for 20189

“Nothing is really exploding, but we are going to see increases,” said Ward, one of several faculty who spoke at the recent Agricultural and Policy Outlook Conference hosted by the Department of Agricultural, Environmental, and Development Economics (AEDE), which is part of the College of Food, Agricultural, and Environmental Sciences (CFAES).

Borrowing money will come at a higher cost too, due to rising interest rates which will continue to increase in 2019, according to Ward.

“We know farmers are borrowing more money now,” he said, adding that land-owners likely will see a decline in the value of their farmland as a result of the Federal Reserve’s interest rate hikes as well as the uncertainty that has come with the future of corn and soybean crop prices.

Crop prices for corn and soybeans have trended lower since 2013 and in recent months have plunged partly due to China’s imposition of 25 percent retaliatory tariffs on U.S. soybean imports.

On a positive note Ward expects an additional 2 percent reduction in land rental values in 2019, following a similar trend for 2018 reduction in rental values.