Fertilizer prices have skyrocketed this fall, and Denver-based Ag lender CoBank said it will be “high for at least the next six months and at least until the spring of 2022”.
“Nitrogen production shocks, deficient global supplies, rising natural gas input costs and sustained demand push up prices.” Almost all types of agricultural spending have increased this year, the USDA said.
Production costs are estimated at $ 387.6 billion, 8% higher than last year and very close to the $ 391 billion set in 2014. Fuel and heating oil costs increased by 32% and fodder costs for livestock by 13%. Fertilizer increased by 12.5%. “The agricultural balance sheet is strong and robust,” said Litkovsky, a USDA economist. This has also led to an increase in land purchases and a significant increase in land prices.
Land prices rose by an average of 15% in the Midwest and the plains, Ag Bankers interviewed by the Federal Reserve said in Chicago, Kansas City, Minneapolis and Dallas. The largest increase in land prices was 28% in Iowa, 26% in Minnesota and 23% in South Dakota.
Bankers write that higher agricultural prices have encouraged farmers to expand their presence by purchasing land. “Agricultural real estate purchases are supported by interest rates on agricultural loans, which are historically low,” it continues.
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