Most Americans feel that rising fuel prices put a strain on their wallets, but for one group it’s not just about the price, it’s also about the resulting shortage.
Local farmers are feeling the effects of rising prices and now rising interest rates, which will impact their consumers.
“It’s so much more than the cost of fuel right now,” Said Brian Barth, who with his brothers Scott and Dan owns BNB Farms Inc., which covers 3,000 acres among 40 parcels from Mount Jackson, Pa., to Poland.
“The fuel situation has led to a lot of shortages and price increases for other products needed for farming. Consumers don’t realize that they are a season away from not getting what they expect from us.” He warned.
According to World Atlas, agriculture accounts for about 20 percent of Ohio’s GDP, and 1 in 7 Ohioans are employed in this industry.
The war in Ukraine, whose flag represents a blue sky over a wheat field, has greatly affected farmers 5,000 miles away in the Mahoning Valley. Russia and Ukraine together export more than a quarter of the world’s wheat. Russia alone exports almost a quarter of the world’s natural gas.
The war has caused instability for both countries, and their exports have declined as a result. They have the same growing season as the United States, so the war comes at a time when American farmers typically rely on exports of natural gas and fertilizer for their crops.
Corn likes nitrogen, which is a fertilizer for the crop. This year, due to the worldwide shortage of natural gas, it is an expensive product. Nitrogen typically costs about $7,500 for Barth’s 5,000-gallon tank; Now it’s $25,000.
Natural gas is also needed after the corn is harvested, to dry it out a bit so that it does not rot.
Barth usually plants corn on half of his fields and soybeans on the other half. This year he sowed corn in one-third of the fields and soybean in two-thirds.
He said many other American farmers have done the same, but until the U.S. Department of Agriculture releases its annual planting report, there’s no way to know for sure.
Barth predicted that rising nitrogen prices were likely to lead to corn shortages.
the supply chain
Compounding multiple supply-chain issues has resulted in doubling or tripling of fertilizer prices for farmers.
Schwartz Farm in Fowler is paying $90 to $120 per acre to fertilize its crops. Last year it paid $20 to $30 per acre.
“There were a lot of people who bought seeds, were ready to sow, and were completely blinded by fertilizer prices,” John King, operations manager at Schwartz Farms, said.
Off-road diesel used in farm equipment has increased by $2 a gallon over the past year. Together, fuel and fertilizer costs for Schwartz Farms increased by 200 percent, increasing its input costs by about $350,000.
Schwartz Farms grows corn, wheat, and soybeans as well as a handful of specialty crops. It contracts approximately 14,000 acres of land in Ohio, Pennsylvania and New York.
Due to high cost, farmers are able to sell at higher prices.
The price of wheat has doubled, which Rick Molnar of Molnar Farms in Poland said has helped cover some of the initial costs.
“We can’t change much of our input cost,” Molnar said. “We have to do what we have to do and look forward to next year.”
He can now sell wheat at $10 to $11 a bushel, up from $5 a bushel last year. This has caused his farm to manage more money than usual, but it will go into paying for higher input costs. He said he doesn’t think the farm will make much profit.
Soy and corn are used as substitutes for wheat. The demand for maize and soya has increased due to the high price of wheat, which has increased their prices.
Soybeans are currently selling for about 1 1/2 times the normal price, and corn has doubled in price. Barth said he didn’t think it would be enough. They have already taken loans to help with this year’s input costs, and they are likely to have lower profit margins than most years.
“This year, I think most of the farms will be fine,” The king said. “Next year as costs continue to mount, we may see some people taking out some big loans and making some tough decisions.”
Last week, the Federal Reserve raised interest rates by three-quarters, the fastest hike since 1994. This may harm the local farmers in the coming years, he said.
Because crops are being sold at higher prices this season, there will be more seeds to sow next year, King said. Many farms will have lower profits this year, which may make planting next year difficult.
Later this summer and fall, farmers usually begin placing orders for seeds and other essentials, such as fertilizer, for planting in the spring. Because the cost is so high now, it may encourage some people to wait.
All these additional costs are being faced by farms, which will continue to reduce until the time of harvest to consumers.
“The cost could certainly be worse for consumers, unfortunately,” said Nick Kennedy, organization director for the Farm Bureau for Columbiana, Mahoning, Portage and Stark counties. “But we are already seeing higher prices in the grocery store as a result of these problems.”
Corn, wheat and soy are all used in a wide range of products, from foods to cosmetics to fuels to adhesives. Therefore, the high prices of these crops affect many other markets. It also includes animal husbandry industry.
Animal husbandry farmers rely on those who grow crops for basic needs like fodder, straw and hay. It will become more expensive for these farmers to raise their animals, leaving many less likely to raise them.
This, in turn, would lead to shortages of meat, dairy products and eggs – raising prices for consumers on these items.
“The farming community depends on itself for many of the products we use every day,” The king said. “When one area gets hurt, we all get hurt.”