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HomeAg NewsInflation Rising Again, Including for Energy-Sensitive Farming

Inflation Rising Again, Including for Energy-Sensitive Farming

Inflation was up in July for the first time in a year, including for energy-sensitive agriculture. A rebound in energy and travel costs led to the first jump in consumer prices in over a year, as inflation accelerated by just over three percent in July from a year ago.

And the news from the Bureau of Labor Statistics was not good for producers, big energy consumers who, like others, saw a seven percent jump in fuel prices from June. AFB Chief Economist Roger Cryan says, “All these ups and downs are concerns. Farmers face so many risks, weather risks and price risks and blight. There are so many risks that farmers face. We worry about every one of them.”

And Cryan says farmers must pay the going price for inputs from fertilizer to diesel because nothing gets done without fuel. He says, “When it’s planting season and harvest season, they’ve got to pay the price today, and that’s a big expense for farmers. One of the biggest.”

Another big expense, according to Cryan, is the cost of borrowing. “The rates right now are very high, the highest they’ve been in over ten years. Actually, the highest they’ve been in about 15 years. So, with these higher rates, farmers are going to be facing higher costs of credit in the short run, and we’re worried that we’ll be talking about the burden of debt in the years to come,” according to Cryan.

Cryan blames the Federal Reserve for tightening credit too much. He says farmers are paying seven, eight, and nine percent for operating loans, well above those rates of just a few years ago.

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