News Economy
American farmer fears explosion in cost price
The euphoria about the relatively high grain prices is ebbing away among American farmers. Grain prices remain quite high for the time being, but farmers are fearful of sharply rising costs and inflation.
In the Agricultural Economy Barometer of the American Purdue University, confidence has fallen to 134 points, the lowest level in a year and well below the score of 178 points last fall.
Rising costs
Farmers who took part in the study fear a sharp rise in prices for, for example, fuel, fertilizer, crop protection products and feed. She also expects rising (rental) prices for land. Grain prices do remain at a relatively high level. Droughts in several regions are dampening harvest expectations and thus revenues.
The American farmer expects little from the government. In 2020, the US government has paid out $7 billion in compensation for damage suffered from forest fires, droughts and floods, among other things. There are concerns that the government will cut that this year. In addition, there may be tax benefits that the sector can still claim.
Lower willingness to invest
"Farmers are concerned that cost factors will rise faster in the coming year than we were used to in the past period," the economists write. "About half of the corn and soybean growers expect, for example, that rents for land will rise further in the coming season. This puts considerable pressure on potential margins."
The declining confidence is most evident in the investment plans. Two-thirds of the respondents indicated that they have fewer plans to build barns, grain silos or stables compared to a year earlier. The willingness to invest in machines has also declined.
Jurphaas Lugtenburg
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