Managing high input costs in 2022

February 22, 2022

Farmer deals with sticker shock on crop inputs

Logistical challenges and other factors have driven prices for agricultural inputs to unusually high levels and have even put availability into question. David Poppens, a former American Soybean Association director from South Dakota has naturally followed the trajectory of one of his most used inputs.

“Fertilizer was rising up through the summer into fall, and then it just kind of kept going straight up, almost, into the winter here,” said Poppens. “We were looking at fertilizer costs of two to three times what they were in 2020 when we were pricing products out, so [with] that huge increase in fertilizer costs, if we would go full rate on some of these products, we’d be almost $100 an acre higher just in the fertilizer costs.”

While there are logistical challenges that put in question whether inputs will be available as needed, there are some inputs for which Poppens will not leave delivery to chance.

“Well, most of the products, I think, the ones that we’ve checked with, [retailers] have, they can guarantee us pretty the products that they have on-site, so we’re not worried about that so much,” said Poppens. “Some of the chemicals and other micronutrients and things like that, we’ve ordered them; once they show up, we’re going to bring them to our site, and then we’ll put them in storage at our own place just to make sure that we do have them…when we need them.”

Poppens and family members he farms with at Lennox, in the southeastern corner of South Dakota, constantly run cash flow analysis and incorporate higher input costs into that equation. But even pricing next fall’s corn at $5 per bushel, they’ll never escape questions of profitability.

“If the yields do well, we’ll make some money at it,” he said. “The concern is always that the price could go down and our yields won’t be as high as we were hoping they would be. Those are the risks that we always have with farming, but we’re always optimistic that if we can get a decent crop and get a decent price, we’ll make some money and we’ll be able to do it again another year.”

Contributing to the Poppens’ profitability is their soybean crop. With the U.S. planting season approaching, David Poppens takes a keen interest in how the weather has affected the crop now nearing maturity in South America. “And so it’ll be interesting what their actual yields end up [being] when they’re going into harvest coming up here soon, and that’s going to help the market if they don’t have near the crop that they were expecting,” he said. “It looks pretty promising that the soybean prices will remain strong throughout this year.”