Late planting start, prices, 'uncharted territory' mean a year of challenges for Iowa farmers
This year's planting season is about as unusual as Blake Reynolds can recall: Snow, rain and cold meant he started planting corn and soybeans this year in mid-May, about when he finished planting his crop last year. And the year before.
"We've been spoiled with good planting conditions the past couple years," said Reynolds, who farms several thousand acres near Indianola.
The late start isn't the only challenge. While Iowa farmers have waited to get into the fields, corn and soybean prices have climbed near record highs — but so, too, have the cost of the seed, fertilizer and chemicals farmers need to grow crops.
That's if they can get them at all. A third of the farmers in a Purdue University survey said they have had difficulty buying inputs: 30% struggled to get herbicides; 27%, farm machinery parts; 26%, fertilizers; and 17%, insecticides.
"Going back to the 1970s, there's only been a couple of times when producers had any kind of input availability issues," said James Mintert, a Purdue agricultural economist who leads the Purdue/CME Group Ag Economy Barometer, a monthly survey weighing farmer sentiment.
"But this is more widespread," Mintert said. "This is a radically different year. This is uncharted territory for farmers."
Among the chief complications: The global pandemic continues to cause supply chain disruptions, experts say, especially impacting Chinese-manufactured chemicals coming to the U.S. Also, the world fertilizer supply has shrunk after Russia, the source of about 20%, came under trade sanctions following its invasion of Ukraine.
And farmers are still seeing the impact of last year's five-week strike at giant farm equipment manufacturer Deere & Co. — a labor action that came as demand for new tractors and equipment was spiking, creating large backlogs. Another strike is currently affecting Deere rival Case-New Holland's plants in Iowa and Wisconsin.
It's not that farmers aren't able to find fertilizer or herbicide, Mintert said. They just may not find the products they wanted. "Farmers need to have a Plan A, B and C," Mintert said.
For example, Reynolds said he was unable to buy Roundup, the nation's most widely used weed-killer, even at five times the price he paid last year. It's pushed farmers to look to alternative or generic brands to fill demand, experts say.
Despite the rising costs, many farmers likely will be able to turn a profit this year, with rising corn, soybean and other commodity prices offsetting expenses, Mintert and others said. But locking in profits next year will be much more difficult, with farmers bearing the full brunt of price increases and uncertainty about where commodity prices will land if Ukraine and Russia, both major corn growers, end the fighting that is disrupting their production.
Reynolds said he locked in lower prices last year for most of his seed, chemicals and other needs. But he also started selling some of this year's corn crop when it was trading around $4 a bushel, not anticipating factors like the war pushing prices over $8 a bushel recently at the Chicago Board of Trade.
Reynolds said some landowners who lease fields to farmers "see corn at $7, $8 a bushel and think cash rents need to go up." With widespread cost increases, he said, "I'm very nervous about profits in 2023."
Despite late planting, bumper crops still possible, Iowa ag secretary says
In north-central Iowa near Marshalltown, Decker Mann said he and his family were pushing hard to finish up planting the last of their corn and soybean acres.
Mann farms with his dad, two brothers, an uncle and cousin, tilling and planting 4,500 acres.
"It's been pretty fast-paced," he said, "especially the last three or four days."
From planting to harvest, Decker Mann gives YouTube viewers an inside look at Iowa farming with his family's fourth-generation operation near Marshalltown.
Statewide, nearly 60% of Iowa's corn and 35% of the state's soybeans had been planted by mid-May, the U.S. Department of Agriculture reported, roughly two weeks behind last year's pace.
But farmers have been catching up fast. Iowa Agriculture Secretary Mike Naig estimated that Iowa farmers planted about 8.5 million acres when warm, dry weather finally arrived in the second full week of the month.
"It was a huge week," Naig said, adding he expected Iowa farmers to nearly finish planting the state's 12.6 million acres of corn by May 21, and about 60% of the 10.4 million soybean acres, even with a few showers.
A late start could prevent farmers from getting record yields in Iowa, the nation's largest corn grower and second-largest soybean producer. But Naig said he believes farmers could still harvest bin-busting crops, especially after getting some much-needed moisture this spring.
Last fall, three-fourths of the state was either abnormally dry or experiencing mild to severe drought, the U.S. Drought Monitor showed. Now, only about a third of the state is experiencing drought conditions, mostly just abnormal dryness.
Mann said his family also caught another break, buying their seed, fertilizer, chemicals and diesel fuel for this year's crop last year, when prices were more moderate.
"If farmers locked in some lower prices, they're going to have a pretty good year," he said.
But with rising costs this year, Mann has been thinking a lot about where his family's break-even may be in 2023 . He's not alone.
Among farmers surveyed for Purdue's Ag Economy Barometer, 60% expect expenses to climb by nearly a third over the next 12 months. "They're worried about a potential cost-price squeeze," Mintert said.
"What happens if everything goes well? The war in the Ukraine ends. We don't have any U.S. crop production problems. And South America (a major soybean grower) has a great crop," he said. "Then I'm stuck with all these high inputs" and potentially lower commodity prices.
Mann hopes for the best but will be ready for the worst. "We'll try to be prepared for whatever disaster comes our way next year," he said.
Will supply issues persist in 2023?
Suppliers, struggling to get farmers products they need this year, also are concerned about getting stuck with high-priced inputs next year, said Chris Behrens, Heartland Cooperative's vice president of agronomy sales and marketing.
Pandemic-related shutdowns in China slowed production of crop protection chemicals, Behrens said. And difficulty obtaining shipping containers has meant delays in getting products that are available.
Iowa has three large fertilizer plants: CF Industries in Sergeant Bluffs, Iowa Fertilizer Co. near Wever in southeast Iowa, and Koch Industries near Fort Dodge . But the companies sell their products globally, and Iowa farmers still must compete on prices, said Behrens, whose cooperative serves central Iowa.
"We have to pay to keep it here," he said, adding that spiking prices for natural gas, a major component in producing nitrogen fertilizer, has pushed costs higher as well.
Adding to farmers' pain: CF Industries warned last month that customers served by Union Pacific, including those in Iowa, should expect shipping delays. Union Pacific, citing rail congestion, told CF and about 30 other customers to reduce their shipments by 20%.
Those factors have converged to drive prices higher. Anhydrous ammonia, a nitrogen fertilizer, costs three times more than a year ago, Behrens said, and nearly six times the price in 2020.
The Biden administration said this month it would make $500 million available to boost domestic fertilizer production, doubling the amount announced in March.
Despite the assistance, Purdue's Mintert said farmers will see little improvement in fertilizer availability or costs next year, given the time it takes companies to expand production.
He said the Biden administration would have more impact by working to lower natural gas prices. "If you want to increase natural gas supplies in the U.S., fracking would be one way to do it," Mintert said.
Biden promised to end oil and gas leases on public lands as part of his agenda for combating climate change. But mixed court rulings and policy recommendations have left that goal muddled and the future of leasing unclear.
Difficult decisions ahead amid ongoing uncertainty
With this year's challenges, farmers will face hard choices this fall about whether to lock in crop production supplies, even at high prices, Behrens said.
"Next year will be a wild card," he said. "Will prices go down, stay the same or go even higher? It's going to be a tough decision to make."
Even if peace returns to Ukraine, a major wheat, corn and sunflower producer, Naig expects global grain markets will take time to recover, meaning demand for Iowa and U.S. farm products will likely be strong for some time.
Reynold isn't so sure.
"Nobody really knows what to think about 2023 yet," he said
He's focused on getting a good crop this year, with a few bushels' difference in yields making a big difference to the bottom line. "We're just going to do everything we can to manage our risks."
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at firstname.lastname@example.org or 515-284-8457.