By Larry W. Dallas
Most of the things affecting agriculture this month happened far away from Douglas County. War in Eastern Europe, inflation in this country, and runaway energy prices are in the national news. The ag press is concerned about drought in South America and the U.S. wheat belt. Other stories track the spread of bird flu around the nation and now in Illinois.
Farmers were already facing fertilizer prices double or triple what they were a year ago, depending on the product. Ukraine, Russia, and Russian ally Belarus are sources of fertilizer. Russia is the world’s second-largest producer of nitrogen and potassium fertilizers and the fifth largest producer of phosphorus fertilizer. It seems likely the current conflict will affect that production, and certainly shipping it out to the end-user.
The U.S. doesn’t buy much fertilizer from the area, but we have a world economy. Canada is the source of much of our potassium fertilizer, but they have been a large importer of Russian nitrogen and phosphorus. Canada will find that plant food somewhere and pay more to get it. I have discussed before that natural gas is the feedstock for nitrogen fertilizer. That price remains high.
The fertilizer suppliers I hear from say we are ok for this spring. Most if not all outlets would have filled up immediately after applications last fall. It is this fall and beyond that become a concern. As long as Eastern Europe is at war and energy prices are high, fertilizer will be expensive. We can only skimp on applications for so long.
Ukraine and western Russia are also sources of corn and wheat for the world’s market. 30 percent of global wheat exports come out of that area of the world, along with 21 percent of corn exports. I heard a market analyst say he thought Ukraine might plant half of its spring crops but there was no way to know how that happens in a war zone.
Wheat on our Board of Trade was limited for a week and corn went up a dollar on the news of the war. Both commodities have traded up and down recently but remain historically high. Dry weather in this hemisphere comes into play as well. With the uncertainty of a crop in Eastern Europe, the U.S. needs at least average crops to make up for the shortfalls elsewhere. The markets are jittery with much of our wheat belt in a drought and the dry conditions creeping into the Corn Belt.
The warmer temperatures gave us a sense of urgency and we have been going over our spring equipment. We swapped the combines and heads for the tillage equipment. At a minimum, we check tire pressures and grease bearings. One of the field cultivators needs all the sweeps that engage the soil changed. We tried to order an extra tire for one implement and were told that size has been back-ordered since September. The weight of the implements and road speed when we move means we need large heavy tires. We don’t need it yet, but we wanted a spare on hand in case we had trouble finding one.
So far, we have not had too much trouble finding the repairs we need, although we have heard horror stories from others. Long delays in finding specialized parts like the tire we need is a big fear. I know that some of the electronics for planter controllers are hard to find. Anything we use in agriculture is going to be a low production item. There are a lot of tractors and planters in the country, but there are many more cars and televisions. You can go buy another TV if yours gives out. We might not find another planter monitor that easily.
I was fortunate to go to Washington D.C. in early March with a group of 12 Illinois Farm Bureau members and staff. We were out there for just three days, but we packed a lot of legislator visits, Zoom meetings, and educational sessions into that time. All the Representatives we saw seemed receptive to the message we left them, and we had virtual sessions with both of our senators. American Farm Bureau staffers updated us before the visits.
One of our messages was that the nation needs to keep the Renewable Fuel Standard for blending ethanol into gasoline and that should be upped to 15 percent year round. That would instantly extend our present supply of gasoline by 5 percent. That seems like a no-brainer when the public is complaining about high fuel prices. In Illinois, and nationally, there are calls to suspend or change gas tax amounts. That would be fine but raising the ethanol percentage used in gas would have instant economic benefits.
When grain prices jumped, there was an immediate call to suspend the RFS so food would not become more expensive. As I said last month, the farmer’s share of the food dollar is around 14 percent. The increase in transportation costs from higher fuel prices is likely to raise food prices by more than $7 a bushel of corn and $10 dollar wheat will. Google says a bushel of wheat makes 42 loaves of bread so that a loaf of bread has 25 cents of wheat in it, even at $10 a bushel. At current prices, there is about 15 cents of corn in a box of cornflakes.
Another message we have from our legislators in Washington was about the importance of crop insurance to agriculture. March 15 was the deadline to choose the coverage level a farmer wanted from this crop year. One thing I hope I have conveyed in these columns is the tremendous risk we face each year when we plant a crop. Federally subsidized crop insurance helps us with that risk.
The University of Illinois estimated last fall that it would cost nearly $700 an acre to plant corn. Beans were less at about $400, in large part because soybeans don’t need nitrogen fertilizer. Those expenses have not gone down in the months since then. That estimate did not include land costs. We are going to bet a lot of money on the weather in the coming year and hope for a profit at harvest. Crop insurance lets us share some of the weather and price risk inherent in farming.
I hope that we will be starting fieldwork before I write again. Please watch for us on the roads as we move from field to field. Every year there are senseless accidents between farm machinery and passenger vehicles. Please slow down. Thank you for reading about agriculture this month.