Staggering farm input costs are driving Ag profits into the ground. It’s a tale of two economies—one, the economy of scale, and two, the cost of farming. South Dakota US Senator John Thune; “This year will be the record year in terms of gross farm receipts. In other words, top-line revenues in agriculture, highest ever, a 14 percent increase over last year. And yet, they’re going to show an inflation-adjusted net farm income reduction of one percent.”
And for good reason according to Thune.
“You look at the cost of fertilizer since 2020, it’s gone up 84 percent. The cost of fuel and oil has gone up 35 percent since 2020. You look at these increases and what it costs to produce a crop this year, and you can see why all these throughout the entire food chain, the impact that inflation is having, ultimately felt by the American consumer and the American family.”
At the grocery store Thune says; “The price of food, groceries, has gone up 13-and-a-half percent, year-over-year, the highest rate of increase since 1979.”
But Russia has further aggravated food inflation, destroying or damaging nearly 16 percent of Ukraine’s crop storage facilities, based on a new, independent report, and initially blockading Ukraine’s Black Sea ports. The two nations are also major sources of fertilizer, and Russia is a major supplier of oil and gas.