Record-High grain price doesn’t mean record profit for farmers

With the record-high price of oil, the cost of farm necessities like diesel, propane, fertilizer, seed and potash have increased at a staggering rate. And that?s just as Kansas farmers gear up to plant fall crops of corn and beans.

In some instances, diesel fuel has increased about 68 percent. Gas and propane are up nearly 54 percent. Fertilizer has jumped 99 percent and potash tops them all at 125 percent.

Just last year, Thomas County farmer Bert Stramel paid $2.10 a gallon for his diesel fuel. Earlier in 2008, he purchased his first semi-load of diesel for $3 a gallon. This cost him $23,000 for about 7,600 gallons.

Stramel purchases three or four semi loads annually to operate his tractors, other farm equipment and nine pivot irrigation wells. Stramel says the next load will cost him about $3.20 a gallon.

The ever-increasing cost of fuel impacts the Thomas County producer?s bottom line. His farm has been in the family for four generations. While cropping inputs are increasing all the time, corn, wheat, milk and other commodities are trading at record highs, too.

Wheat prices are up about 116 percent, corn is up 30 percent, soybeans 93 percent and milk 18 percent. While these prices for crops have surged during the past year, they haven?t gone up as high as the prices for inputs necessary to run the farm.

Even with these high prices, a farmer?s input costs, to plant and make the crops grow, have eaten up any kind of profit most might receive when they sell their commodities.

?Just as commodity prices are high right now, they?ll drop,? Stramel says. ?Typically the price we pay for inputs never go down.?

In most farm families, one or both spouses have a job and drive somewhere off the farm to work. This also impacts a producer?s daily expenses including fuel, health insurance, medical bills, heating and cooling costs, groceries?all of which are continually going up.

For the Stramel family, the money they?re making on beans, wheat and corn is essentially being eroded by sky-high operating costs. What will this bode for the future?

The Thomas County producer is concerned and knows he?ll face challenges.

?I believe we?ll make it,? Stramel says. ?I hope there will be a balance out there that will work for all of us.?

In the meantime he?s started converting some of his diesel irrigation engines over to electricity. Plans are to change three wells to electricity. This depends on how quickly his electrical provider can bring electricity to his farm.

Stramel has also changed the way he purchases inputs for his crop. The past couple years he?s buying fertilizer, seed and other crop necessities one year to 18 months before he plans to use them in his cropping programs.

Now with the Kansas weather beginning to warm up and planting season just around the corner, so too are the continuing challenges facing farmers like Stramel.

Can his family make enough? Can they make more money from their farm than it takes to run it?

The Stramel family legacy depends on this happening.

John Schlageck is a leading commentator on agriculture and rural Kansas. Born and raised on a diversified farm in northwestern Kansas, his writing reflects a lifetime of experience, knowledge and passion.

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