Farmers Aren’t Impervious to Inflation

Fertilizer and Seed Prices Soar

Market observers note you can start from the ground up when it comes to inflation’s impact on US farmers. Seed prices and fertilizer costs are way up, and it’s causing a major drain on profits. Research shows the price of anhydrous ammonia fertilizer has increased over 200% from a year ago, checking in at an all-time high of $1,492 per ton. The rising price of natural gas is a factor here, as it’s a key component in fertilizer production.

Seed prices were similarly up 10% in the most recent quarter, according to crop-seed and pesticide supplier Corteva (CTVA). The company says crop-protection services also cost 6% more than they did 12 months ago. Analysts point out price increases like these that are intended to offset inflation eventually mean consumers end up paying more.

Switching It Up With Soybeans and Wheat

Farmers explain rising fertilizer prices impact the types of crops they choose to grow. Corn for example is resource-intensive and could make less sense for farmers facing diminished profit margins. Crops that generally require less fertilizer may also be preferred for similar reasons.

Analysts note these types of trends have an impact on the market’s overall supply of certain crops in the months to follow. Crops such as wheat and soybeans are less resource-intensive than corn, potentially making them more profitable choices for farmers. Farm Progress estimates acreage dedicated to soybeans will be up 6% this year and outpace corn production for just the second time in US history.

Growing Grocery Store Bills

As farmers’ expenses increase, food production companies face higher wholesale costs, continuing the upward pressure on prices overall. Analysts argue this cycle could continue to cause food-price inflation. Economists maintain that while the supply chain’s slowdown is a factor, the issue runs deeper than that.

For example, corn and soybeans are often used as animal feed for meat companies. Chicken and beef will then cost consumers more at the grocery store, as those prices rise. Some farmers may hold back on new equipment purchases given diminished profits, further hampering production. Inflation continues to prove invasive to many aspects of the world’s economy: including what’s for breakfast, lunch, and dinner.

Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.

Sign up

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

TLS 1.2 Encrypted
Equal Housing Lender