Rising Prices Are Worrying Farmers

Clint Thompson Florida, Top Posts

By Ernie Neff

Rising prices are worrying Florida farmers, Gene McAvoy with the University of Florida Institute of Food and Agricultural Sciences (UF/IFAS) said in a presentation this summer. McAvoy is associate director for stakeholder relations at the UF/IFAS Southwest Florida Research and Education Center. His presentation was to the National Association of Credit Managers Statewide Agricultural & Turf Suppliers Credit Group.

A few of McAvoy’s key points follow.

Gene McAvoy
  • The U.S. inflation rate rose 5.4% in June; that’s the highest inflation rate since 2008.
  • Agricultural input costs rose for farmers, including increases of 25% in a year for ammonium nitrate, 29% for urea and 33% for farm diesel.
  • Growers are holding off on new construction, but not so much on farm machinery.
  • U.S. farmers ended 2020 with their best net income in seven years, but U.S. government stimulus money and COVID-19 relief funds provided more than 40% of farm income. “So, it’s a little deceptive,” McAvoy said. Cash receipts decreased 1% to $366.5 billion, their lowest level in more than a decade. “This 40% stimulus money is probably not going to be there in the future,” McAvoy said.
  • Vegetable and melon cash receipts are expected to fall 5.7% in 2021, mostly because of lower prices.
  • Farmers expect their input costs to rise much more rapidly in the year ahead than they did over the past decade.
  • Vegetable prices received by farmers are largely unchanged for 20 years.
  • A recent U.S. Department of Agriculture report stated that five crops had significant price decreases: yellow squash (down 14%), bell peppers (down 10-11%), zucchini (down 11%), tomatoes (down 10%) and asparagus (down 17%).
  • A decade ago, farmers received 17.6 cents of each $1 Americans spent on food. “Their share now is barely above 14 cents, while processors, retailers and others in the food chain take a larger share.”

Many farmers are consolidating and merging, resulting in bigger and more economically efficient farms, McAvoy also reported. Many vegetable farmers have a corporate structure and grow nearly year-round on farms throughout the U.S. and abroad, he said. Having diverse locations allows these operations to provide a year-round supply of produce, he added.

McAvoy touched on several other agricultural topics, ranging from the increase in freight costs to the use of precision agriculture techniques on farms. See his full presentation here.