Northeast Ag Production Costs Have Spiked 10%

Northeast Ag Production Costs Have Spiked 10%

Farm Credit East reports specific inputs have risen more than 33%.

You only have to look at your stack of bills to know it: Northeast farm production costs over the past 12 months have increased on average by 10.3%. That means many farm operations' costs are substantially higher than that.

Farm Credit East's Knowledge Exchange analysis indicates that particular cost areas have experienced year-over-year increases of more than a third. For instance, purchased feed is up 34%; Fertilizer is up 34%; Fuels are up 36%. 

WHATA JUMP! Since 2000, the Northeast's farm production cost index has spiked close to 80 points from the 100-point base. Source: Farm Credit East

Grain prices of all types are up significantly over last year due to tightness of supply and growth in the biofuels market, notes Bill Lipinski, CEO of Farm Credit East. With the close link between fertilizer prices and energy costs, agricultural producers are experiencing rising energy costs in more ways than one.

Most other production costs have increased at, or slightly above, the rate of inflation. But Lipinski notes that one of the continuing issues is ensuring an adequate labor force. Immigration enforcement efforts continue to create challenges, and farm businesses find it increasingly difficult to use guest worker programs.

For some businesses, this is creating major challenges and additional costs, he adds. And, it's also discouraging some farms from expanding their operations. That's why it's so important," stresses this Farm Credit executive, "that Congress establishes a workable guest worker program for agriculture that will ensure farm products continue to be grown in this country."  

Even so, Lipinski says Northeast agriculture has the ability to grow, creating jobs and economic activity throughout the region. "I am very optimistic about Northeast agriculture," he maintains.

It has all to do with nearly half of the country's consumer base being on the East Coast. Consumers will greatly support Northeast farmers by buying local farm products and visiting farm markets, greenhouse operations and wineries throughout the region. And that support is already making a difference for progressive, consumer-oriented ag marketers.

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