Seed World

Higher Cost and Inflation Weigh on the Mind of Growers in 2023

As 2022 ended and the world entered 2023, the agriculture industry reflected on a multitude of areas, including crop production, farmer sentiment, inflation and how the government would address the building concerns of producers.

It is necessary for not only farmers, but also seed experts, to be aware of challenges across the world that will inevitably impact the crop and to gear themselves with knowledge to help along the way. Here are the agricultural highlights for the months of December 2022 and January 2023.

Crop Production Annual Summary

Corn and soybean production saw a decline from 2021 to 2022, according to the USDA’s National Agricultural Statistics Service (NASS)’ 2022 Crop Production Annual Summary.

Corn growers in the U.S. produced 13.7 billion bushels, a 9% decrease from 2021. U.S. corn yield is 3.4 bushels below 2021 — a year that hit a record high for yield at 176.7 bushels per acre — at 173.3 bushels per acre. Area harvested for grain dropped 7%, coming in at 79.2 million acres.

In 2022, soybean production was recorded at 4.28 billion bushels, a 4% decrease from 2021. The estimated average soybean yield comes in at 49.5 bushels per acre, falling 2.2 bushels below 2021 and coming up .7 bushel short from the Nov. 1 forecast.

All cotton production totaled 14.7 million 480-pound bales, a 16% decrease from 2021. The estimated U.S. yield is 947 pound per acre, a 128-pound increase from 2021’s yield. Harvested area is down 28% at 7.44 million acres.

The Winter Wheat and Canola Seedings and Grain Stocks reports were also released by NASS. This year’s estimated planted area for harvest is 37.0 million acres, an 11% increase from 2022.

The Grain Stocks report shared that the estimated corn stored as of Dec. 1, 2022, will be down 7% from the same time in 2021. Soybean stocks declined 4% from the year prior. The total of corn stored in all positions came in at 10.8 billion bushels, while soybeans hit 3.02 billion bushels. All wheat stocks saw a 7% decrease from a year earlier. On Dec. 1, 2022, all wheat stored in all positions totaled 1.28 billion bushels.

Farmer Sentiment

After a two-month decline, the Purdue University/CME Group Ag Economy Barometer closed out a year of weak sentiment on a higher note, skyrocketing 24 points to a reading of 126 in December, according to a release.

Farmers across the country were more optimistic about their current situation, as well as their expectations for the future. The Current Conditions Index saw a significant increase at a reading of 135, 37 points up from the previous month. The Future Expectations Index rose 18 points, coming in at a reading of 122.

“The improvement in current sentiment was motivated by producers’ stronger perception of current financial conditions on their farms and could be attributed to producers taking time to estimate their farms’ 2022 income following the completion of the fall harvest,” said James Mintert, director of Purdue University’s Center for Commercial Agriculture and the barometer’s principal investigator.

With the new year on the horizon, December’s survey prompted producers to compare expectations for their 2023 financial performance on farm to 2022. Respondents indicated they predict a lower financial performance than in 2022, citing increasing costs and narrowing margins as main reasons.

Cost concerns remain top of mind for producers. Close to half of crop producers said they predict farmland cash rental rates this year to surpass the previous year. Other main concerns for 2023 are higher input costs, rising interest rates and decreased crop or livestock prices.

Inflation Concerns

Farmers aren’t wrong to worry about higher input costs and rising interest rates, as Dan Basse, president and economist at AgResource, shares their concerns.

“Everybody’s got their hands in [the grower’s] pockets,” Basse explained during his presentation at the American Seed Trade Association (ASTA)’s CSS & Seed Expo 2022. “Farmers are really anxious across the U.S. Everything costs more. Whether it’s feed, fertilizer, labor, livestock, pesticides, steel, rent, property taxes — everything is costing a little more.”

In addition, payments to farmers from the government have slowed or come to a halt, which causes more anxiety on the farm level.

“The biggest cost per acre will be fertilizer,” Basse said. “This is another year in which farmers will be spending over $150 to produce an acre of corn — which is a very lofty cost.”

While farmers are seeing high input costs, there is a light at the end of the tunnel as Basse believes that there shouldn’t be any issues when selling corn and soybean seeds to the farmer.

“If you look at the opportunity, the farmer should plan for more corn and soybeans — he’s making about an extra $110 per acre,” Basse said. “We are forecasting this year that farmers will plant about 92 million acres of corn, which is up almost 3 million acres from last year. The farmers might still be anxious, but they have a smile on their face.”

USDA Major Program Improvements and Investments

Farmers can also look forward to added support via program improvements, progress and investments in the pipeline from the USDA, according to a recent release. Agriculture Secretary Tom Vilsack announced that the department continues to make progress in various areas including:

  • Increased access to domestic, innovative fertilizer capacity for producers battling high input costs.
  • Enhanced risk protection for underserved producers.
  • Offering relief for producers affected by disaster and the pandemic.

The USDA’s programs and efforts fall under the commitment by the Biden-Harris Administration to reduce costs for producers, elevate “competition and access to market opportunities” and guarantee equity in the creation and application of these programs to aid all producers, concluded the release.