In addition to rising labor costs, fertilizer and fuel prices have been rising for months, with no roof in sight. He says his profits have dropped between 10% and 15% this year and that 2022 could be worse.
“It goes from the bottom line,” Jones said. “If you double the cost of something, you can’t just double the harvest.”
“My price is still the same, or lower,” Jones said of his sweet potatoes.
The farmers’ toll
“Farmers take prices, not manufacturers,” said Patty Edelburg, vice president of the National Farmers Union. “People pay a lot more in stores, but what farmers get has stayed pretty much the same or has become much more volatile … The middleman is really the one who makes the profits.”
In many cases, Edelburg said, the processors and distributors who get food from the farm on store shelves are the ones who are currently passing on their rising costs to consumers. The USDA also confirmed this. Many of these companies face their own supply chain problems, with materials and ingredients still trapped in cargo ships and a shortage of labor and truckers that increase wages and costs.
Most turkey farmers, according to the American Farm Bureau Federation, signed sales contracts for this Thanksgiving Day in the spring, but are now being compressed by the same entry costs as other farmers.
“The increase we’ve seen in feed costs, fertilizer costs, transportation and gasoline – the farmer is paying all these increased costs, but they’ve blocked the price they get for their turkeys,” said Veronica Nigh , senior economist. to the American Farm Bureau Federation.
Increased operating costs
“To some extent, we’re also trying to pay for market uncertainty right now,” said Trey Malone, an agricultural economist at Michigan State University. “We are in the midst of a perfect storm of unique events in agricultural production.”
Malone says farmers should prepare for a few more months of higher costs with a wide range of inputs, including pesticides, seeds, fertilizers, fuel and labor. Even farmers who now receive a higher price for their crops, he said, are strained by rising operating costs.
In early November, Purdue University’s Ag Economy Barometer, which surveys U.S. farmers, found that farmers ’sentiment weakened for the third month in a row, reaching its lowest level since the first months of the pandemic, driven largely by rising input prices.
Some farmers are being supplied with expensive materials in case suppliers run out. Others are waiting, waiting for prices to go down.
Supply chain price hikes, in addition to those that have already raised labor prices in recent years, are threatening Matt Alvernaz’s California sweet potato farm. He says the family farm typically earns more than $ 100,000 a year, but this year he could lose between $ 80,000 and $ 120,000. And the costs just go up.
“We could lose a quarter of a million dollars next year,” Alvernaz said. “We wouldn’t have enough cash to take over the next year, for our operating loan to work.”
Farmers are accustomed to volatility, and both Alvernaz and Jones are now looking for ways to adapt, such as downsizing or switching to other crops.
“That will worry you, but I won’t let it fall on us. We’ll survive,” Jones said. “We just have to get a fair price for what we’re growing.”
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