News High Input Costs May Mitigate Crop Profit Potential

High Input Costs May Mitigate Crop Profit Potential

High Input Costs May Mitigate Crop Profit Potential
June 14, 2012 |

Alabama farmers are expected to plant more peanuts, corn and soybeans but less cotton this year, according to spring planting reports released by USDA’s National Agricultural Statistics Service.
Mild to above-normal temperatures from November to March, combined with adequate rainfall for most of the state during spring planting, gave many farmers a jump start on this year’s crop season. The wheat harvest continues to look favorable in most areas.“Good prices are predicted to hold for most commodities, giving farmers an optimistic outlook for this year’s crops,” said Buddy Adamson, director of the Alabama Farmers Federation’s Cotton, Soybean and Wheat and Feed Grains Divisions. “ But those prices may not be enough to overcome record-high input costs.”Driven by favorable prices, U.S. farmers are expected to plant 95.9 million acres of corn in 2012, up 4 percent from 2011, according to the USDA report. If realized, this will be the largest corn acreage in the United States since 1937, when producers planted 97.2 million acres of corn.Farmers like Walt Richardson of Washington County said commodity prices are good, but higher costs for seed, fertilizer and fuel are making him cautiously optimistic.“Everything costs more,” said Walt, who farms with his brother, David, and their father, Rod. “And then there’s always the weather. Now, it’s a matter of ‘when’ we are going to have a drought, not ‘if’ we’re going to have one.”Last year, the Richardsons planted 850 acres of cotton and 185 acres of peanuts. However, the higher profit potential for peanuts this year influenced their decision to plant more peanuts in 2012. Their cotton picker burned last year, so instead of replacing it, they opted to plant more peanuts and invest in another peanut combine.“We booked peanuts for a contract of $750 a ton, and that’s the highest we’ve ever seen,” Rod said. “But where we have paid 50-something cents a pound for peanut seeds, we’re paying $1.30 a pound this year. Fertilizer is also nearly double what it was just a couple years ago, and diesel fuel is $4 a gallon.”Two years ago, the Richardsons had their best corn crop ever. Last year was their worst, mostly because of the weather. Their corn acreage didn’t change this year because they grow corn for a niche market – wildlife feed.Despite the high costs of planting crops, a recent survey of Alabama producers shows that of the state’s four major row crops, corn acres are projected to jump 7 percent, while soybean and peanut acres are projected to increase 3 and 24 percent, respectively. Cotton acres are projected to drop 13 percent from 2011 levels.The survey also shows the state’s hay crop should be up 20,000 acres from 2011. Winter wheat, with 230,000 seeded acres in 2011, will increase 5 percent this year, and oats are expected to increase by 5,000 acres for a total of 50,000 acres in 2012.Many farmers are investing in technology and irrigation to hedge their profit potential. The Richardsons are among them.“This will be our first year using GPS technology to plant and harvest all our crops,” Walt said. “Last year, we used it to a limited extent and could see the benefits.”For more information about the planting survey, visit

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