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Cost of Farming on the Rise
Good news for farmers – the price of crops has risen dramatically in the past year, bringing bigger profits.
And the bad news – the cost of farming those crops has also reached record highs, raising the stakes for farmers who seldom reaped massive profits in the first place."All the costs are going up, substantially - fertilizer cost, fuel cost – anything that has to do with petroleum products has increased substantially," said Kenner Love, agricultural extension agent for Rappahannock County. "Obviously, there's inflation every year, but some prices have doubled or gone up threefold.
"It affects everyone in agriculture . . . . Anybody that requires any sort of fertilization, or pesticide use of any kind - it's all going up in price. It's just across the board," said Love.
Across Rappahannock and Culpeper counties, farmers and farming experts agree that the nation is seeing something unprecedented. Production costs have kept pace with crop prices, leaving farmers with the same margins, but high figures and much more risk. How it will affect agriculture as a whole years from now remains to be seen.
"They need more cash to plant a crop," David Durr, General Managerof the Culpeper Farmers' Cooperative, Inc. said. "The cost to plant an acre of corn has doubled, even tripled. It just increased the risk."At Griffwood Farms, Taye Griffin has watched his diesel prices jump by 140 percent. The fertilizer bill likewise jumped 250 percent, he added.
"Well, I'll just keep on knocking," he said. "I've been doing this all my life, but I'm not the only one in the boat."
Many point to corn production as a primary cause.
With the demand for ethanols on the rise, corn prices have never been higher. But corn prices carry a huge impact to other areas of farming. For instance, the cost to produce 100 pounds of milk increased 25 percent from March 2006 to March 2007, said Durr. And 90 percent of that cost increase was driven by the price of corn.Only a fraction of American corn – 5 to 10 percent – actually results in human consumption, said Durr. Most instead goes to feed
livestock, meaning more expenses in livestock operations as well.The rest goes overseas. Other countries – particularly in Asia – are consuming more meat than ever, and demand corn as feed for their animals. That coincides with a drop in the value of a dollar, making exports to other countries more attractive."It's kind of a perfect storm," Durr said.
And fuel costs plague the farmer more than the motorist. Virtually every stage in the process from planting to fertilizing and harvesting requires the right machine for the job. And those machines need large amounts of fuel
"Diesel fuel is killing everybody," Beddow said. "The thing about bio-diesels – they're great. But they cost more than regular diesel, and you have to upgrade all your tractors, so there's another added cost."
And fertilizers use tremendous amounts of energy in their manufacturing. As a result, fertilizer prices have doubled, sometimes tripled. Pesticides actually contain petroleum, leading to a 20 to 40 percent increase.
Griffin said that fuel prices are hurting him worse than ever. In the 1970s, fuel shortages meant a big, temporary spike in gas prices. Now he says things are worse, since gas prices steadily rise.
"I've never seen it like this," Griffin said. "I've never seen the stuff spike like it has now."
The situation has left farmers with few options, other than riding out the storm.
Spencer Neale, a commodity and marketing specialist for the Virginia Farm Bureau Federation, worried that rising costs would mean especially bad news to smaller farmers. In response, larger farms might emerge, potentially saving through economy of scale.
He added that consuming more locally-grown crops could help the situation.
"It's a pretty scary time for production agriculture," Neale said. "I think people are going to have to ride it out and see what happens. But no one has a crystal ball. American agriculture's pretty resilient."
The prices won't stop Joe Beddow, who gave up a lucrative construction career several years ago to pursue farming, his lifelong dream.
Now after farming under someone else, he wants to work his own fields. Beddow, 36, began negotiations on a 220-acre farm in Rixeyville. With land prices as high as they are, getting a $2 million loan for the land would be a challenge enough. Now the rising costs have made his dream harder than ever.
"It's a risk, it's a game," Beddow said. "It used to be you could either run cows or do crops. Now you have to do both. If you put all your eggs in one basket, you could ruin yourself."
You may contact Jason Peck at 825-9882 or e-mail jpeck@timespapers.com.


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