Agriculture is an Evolving Economy

Execute sound decisions with your money

Published in the April 2009 Issue Published online: Apr 30, 2009 Nancy I. Butler
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This year the Far West Agribusiness Association had over 550 attendees who traveled from throughout southeast Idaho to Jackpot, Nev. Ag consultants, agriculturalists and growers learned about the new products being offered by chemical company representatives for the 2009 growing season.

The keynote speaker, Tom Philbin, Vice President North American Sales for Mosaic, presented a discussion on recalibration of crop nutrient markets.

Philbin says, "We took a look at global ag phosphate markets to get a feeling of what we are seeing in the market and how to move forward."

Fertilizer costs skyrocketed in the second half of `07 and the first half of `08 with the peak of the storm in the summertime.

Incredible challenges have come in the last seven or so months with global financial crisis and commodity crisis. "We saw $8 dollar corn in July and most thought they would see $10 dollar corn by the end of the year," continued Philbin, "despite the difficulties in the past years the farmers have actually increased production with higher yields.

Fertilizer has been a big part of the increased yields and in the last five years global fertilizer consumption increased 25 million tons."

Growth has been incredible, the ethanol and biofuels impact have been a huge impact, and despite the downturn in ethanol it is still going to be a part of our future.

India and China are looking to increase consumption for better food/nutrition. These are countries to watch in terms of incredible increase in production.

Philbin believes "ag economics are quite positive despite the clouded pipeline we are seeing right now, the core grower farm operation should still net $300 per acre for corn and there are some really good signals for rebound crop prices in '09.

The latest net farm income is at a record level, this was expected to be a $100 billion, the latest projections are at $90 billion in net farm income for 2008."

"Despite operating costs increasing considerably from `07 to '08, specifically fertilizer prices leading the surge, numerous expert opinions believe that if the fuel and fertilizer expenses stay put increased costs should not move up more than five percent for '09.

Discussing the economics of potato fertilization, Paul Patterson, University of Idaho extension economist, said, "Economists do not give straightforward answers. We think in terms of relative content, not absolute." However, Patterson does say that economics can serve as useful in maximizing economic optimum. The three things that matter most are price input, price output and production output. "Growers need to focus their attention on managing the factors they can control because they can't control commodity prices but they can control input costs."

One of the tools offered by the U of I and Patterson, is the Crop Enterprise Budget Worksheet program to help growers in the business focus of operations. It is designed to help growers keep track of their own field-by-field costs.

Patterson has added new budget sections that have been requested such as organic potatoes and the Roundup Ready sugarbeet. Keeping growers informed of operating costs as well as ownership responsibilities in costs that may be overlooked or considered less than necessary.

No matter how small a cost in operation it is the many small costs that can quickly add up.

Visiting the website at www.ag.uidaho.edu/aers, look for crop budgets under the resources button and then click crops.

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