March 18, 2005 | By: Terri McLean
LEXINGTON, Ky.

Higher farm production costs – led by skyrocketing fuel prices, rising fertilizer rates and increased seed costs – promise to give Kentucky farmers a run for their money this growing season.

The “big one” that has most everyone concerned is, of course, the soaring costs of fuel, in particular diesel fuel, said Chad Lee, Extension grain crops specialist with the University of Kentucky College of Agriculture. 

“Most farmers are burning diesel to get across their fields,” Lee said. “As of this month, current diesel prices are averaging about $2 a gallon. Last year, they averaged $1.57 at this same time.”

Natural gas prices, up an average of 23 percent this month, also are worrisome, Lee said. Natural gas is used to make many of the nitrogen fertilizers used in corn and wheat production.

When it comes to fertilizers, however, potassium probably will see the sharpest increase in prices. Potassium is used for both corn and soybeans. 

“Potassium is a big jump this year, although that one probably won’t be as sustained as some of these others,” Lee said.

Seed prices are significantly higher this year as well. For example, Roundup Ready soybean seed costs have increased between $4 and $7 per 50-pound bag, Lee said.

“Depending on your seeding rate per acre, that is somewhere between $4 and $14 more per acre,” he said, adding that a farmer with 1,000 acres could potentially spend as much as $14,000 more on soybean seed. “That can make a big difference.”

Corn seed for an 80,000 kernel unit (80,000 kernels in a bag) is running between $80 and $180, depending on technology traits. The highest seed price for corn just two years ago was around $140.

Climbing interest rates also may be a concern this growing season, Lee said. “If farmers are getting a short-term loan for operating costs, that interest rate is higher this year than it was last year. Again, that’s another cost of doing business.”

There is one positive when considering input costs, Lee said. Herbicide costs, which have been decreasing the past several years, are expected to continue their downward trend – enough to possibly offset some of the increased seed costs.

Despite what might appear to be a bleak outlook for farm production costs, Lee said there are steps farmers can take to lessen the impact. 

“With fertilizer prices, farmers really cannot afford to put out blanket applications of fertilizer,” he said. “For example, if they’re used to putting out a certain amount of potassium every year in their field, they really need to go back and do soil tests this year.” 

For farmers who seed at higher rates than recommended, especially corn and soybeans, backing off slightly on those rates also might help hold down production costs, Lee said. 

Combating high fuel costs probably will be the biggest challenge for farmers.

“That’s a tough one,” Lee said. “The one thing that they can do is if they’re in a conventional till system, they could switch to a no-till system and reduce the number of passes they make across the field, particularly with heavy tillage equipment. Tillage equipment will use more fuel per acre than spraying an herbicide on that same acre.”

Contact: 

Writer: Terri McLean 859-257-4736, ext. 276

Contact: Chad Lee 859-257-3203