Crop price vs inputs

Does anybody know where there might be a chart or graph showing the relationship between crop prices and inputs over the years? It's my contention that the small handful of companies providing inputs raise and lower prices to make sure they get a percentage of what the farmer gets, regardless of whether their excuse has any merit or is totally made up. I'd almost bet that if it was charted, the lines between income and expense would actually get closer together as commodity prices increase with inputs taking a greater percentage of income.

Watch the you tubes of One Lonely Farmer,,one of his videos went into some detail of just what you are describing,Hes
also trying mushroom compost and lime to cut way back on fertilizer

There was a new potash plant built near Hersey Michigan a few years ago. Mosaic bought it and shut it down. They said it wasn't big enough. Looks to me like it was big enough to take a chunk out of their monopoly. If it's really short, why aren't they reopening what's essentially a brand new facility? Same reason they bought it and shut it down is my guess. It would produce too much for their liking. There's a new one being built in Evart Mi. They say that one will dwarf the one in Hersey. We'll see what Mosaic does about that one in short order I guess.

Don't forget the government comes up with more subsidies when commodity prices are low also.

True enough, so the gap between income and expense gets even wider when you figure that in. The big input suppliers don't figure that in before they engage in price fixing. On a percent basis, I'd guess the farmer share is even more when prices are lower.

I'd guess the big time investment tycoons on Talk and Tales are smiling all the way to the bank with their dividend checks.

I'm un-ware of any chart that you can look at with both inputs and grain prices on the same chart. One that you can compare 2022 with 12, 02, 1992. And the same chart pointing out that this such and such year was the best, and this one the worst.
And finding one that has such info for all the grains, and not just per say corn, would even get more complex.

You can probably do your own research on grain prices, and also input prices, and put the 2 together yourself. Some college someplace probably did/does a study on this to come up with an average acceptable operating expense according to markets, but I'm guessing they would likely only go back far enough to determine an average (5 or 10 years, not 50). And I don't know how you'd go about retrieving thier findings. Even if you did, it'd probably would only reflect recent years. They don't care about 1972 when doing a study like that.

I see what your saying though. Let's adjust our fertilizer price according to grain markets, and gouge the farmer for as much as we can.
I'm not sure that that's entirely how it works. To even fathom that, you'd have to bring the futures market of grain into play. Not just the cash grain market. And the futures market, is of course is a projected price, and one that is subject to change come harvest time. Unlike the cash market today. What it is today, is what it is. Although it's a set price today, doesn't mean that today's price is what it'll be at harvest time. My point being, you couldn't compare input costs to today's cash prices. You'd have to compare input costs to the projected futures market. What you are suggesting (fertilizer companies price gouging according to futures grain market), would imply that they have control of the futures market. And maybe they do have an impact on that by simply setting thier fertilizer price. But, our grain markets are so heavily influenced by the worldly market, that I for one don't believe fertilizer companies here in the states, have complete control of the futures grain market.

Can they price gouge, yes. Can they help push the futures market up, yes. Can they have complete control of the futures market to the point they are only allowing a farmer a set profit margin? I don't think so. World production has to much control of futures market for that to be the case.

Maybe I'll ask John Phipps on US Farm Report. He always has a way of finding information like this. I could use another one of the mugs he gives out when he reads your letter on the air. I've got two, but my red one is needing to be replaced pretty soon anyway.

So why ask here then??

If you listen to farm reports at all, then you've heard of places like Brazil, Argentina, China, and Russia, and know what an impact they have on grain cash and futures markets!!

This might sound like nothing to do with what you are saying in main post. But in main post, you are implying that a farmer is caught up in the middle of set prices of those in control of input costs. In order for this to happen, and farmer be restricted to a set profit margin by those in control of the input costs, those in control of the input costs, would also have to be in control of the futures market. If not, the farmer WOULDN'T be pinched in between the two markets by only those in charge of the input costs.

I'm not arguing that there is not price gouging going on. But if how much money a farmer makes was determined by those in control of input costs, then thier mistakes would be seen as, every farmer in the US goes broke, or they all make huge amounts of money. And mistakes can be made very easily when it comes to the futures market. Don't believe me. Gamble a little in the futures market yourself. When doing that, some days you are the windshield. Some days you are the bug.

I'm not saying we can't make a profit, I'm saying a few big input suppliers are going to fix prices to make sure they get their share. You'll never convince me otherwise. Ten years ago there was no lock down, no major war, they just raised prices because we were making too much money and they could, plain and simple. They saw a buck and went after it. Until the Justice Department starts enforcing anti trust laws, we'll always be in the same boat. I'll ask Phipps, but I have a feeling it'll be just like when I asked him what was so much better with USMCA than with NAFTA. He just laughed and said he'd been wondering the same thing.

I agree with thoughts of big companies controlling our profits. Closer to area specific is the basis elevators use to increase their profits and reduce farmers income. Especially when Coops buy up the competing elevators, forming large Coops, controlling the market in a large area and raise the basis.

No surprise the Number one reason a corporation exists is to make money for its shareholders so when they see an opportunity to make more money they take it.Plus when prices for a certain crop goes up then everyone and their brother jumps in to plant some resulting in more demand for inputs for that crop.

Latest planting intentions report shows corn plantings will be down due to high fertilizer costs and high returns on alternative crops that use less.

Somebody somewhere must have charted this.

Some very large inputs costs are still determined by the demand from farmers themselves rather than by the suppliers. Farmland cash rent costs and the cost of feeder animals are two that come to mind. When farm commodity prices are high everyone and his brother wants to jump on the gravy train and soon the price of inputs rises due to the increased demand, sometimes so much that profits are back down to breakeven levels or less and there is no return on their labor. In can really pay to pencil out the numbers before making big decisions. Some years there is more profit from selling feeders and selling the no longer needed grain than there is in feeding them out yourself. Likewise, some small dairy farms found they generated more income by renting out the farmland and retiring than they did from the dairy.

It gets hard to compete with the guys that are farming for entertainment.

Your state's extension service might have that information, or enough information that you could compile it yourself. Also check with the extension services in neighboring states.

Acerages don't change that much, in fact, when corn and beans are high and inputs go up because of it, other crop prices rise too and are generally more profitable. There are more corn and beans grown in years with low commodity prices because of the subsidies and crop insurance that make them less of a risk.

You know good and well, if you are making money other folks want part of it. Called Capitalism....er ah Human Nature.....Greed????

That has been true in the past. I did see a graph a couple years ago that indicated that fertilizer was a pretty consistent percentage of grain revenue.

This year, however, is an extreme.

If you are in WI and follow a nutrient management plan to the T, you use a formula to determine the maximum return to Nitrogen, and use a ratio of the corn price to N fertilizer price. Usually, that ratio is something like .05 to .10 for corn. It was .15 a few months ago, and likely closer to .2 now. I've never seen it in this range since I've been using MRTN.

Monopoly? Price fixing?

They had already raised prices for no reason before the war broke out. If they back off on that part of the increase, it'll be way too obvious what they've been doing, so we have to put up with the increase for no reason combined with the black swan.

The seed companies and the fertilizer companies have enough of a monopoly to be able to price their product based on farmer revenue.

Taxes seem to come in 3rd, the govt plays the game the same way and they are the ultimate monopoly.

The herbicide companies are close, but there is enough generic production of her indices so they dont quite have control. Yet.

Paul

I'd argue there was some reason for the prior increases starting early last summer... there were trade issues on phosphates, potash supply had been extremely plentiful the year before (several years, to where potash corp had negative earnings and had some closed some mines) and natural gas prices had driven up costs on N. Add shipping delays from overseas and a hurricane that delayed shipping up the Mississippi.

I can't say any of those factors warranted the increases we saw, but, that was what we were told.

In the meantime Nutrien stock (formerly potash corp) has about doubled in the past year.

It seems like price gouging. But fertilizer companies are like everybody else... there has to be some margin to keep going longterm. We just debate over how much is enough.

Those excuses are as much bunk today as they were ten years ago when commodity prices were high and inputs followed. Anybody who thinks fertilizer prices would be this high if corn was $2.50 and beans were $8 needs to click their heels together three times and repeat there's no place like home.

Just another way to get screwed. Everyone else can raise there prices the farmer has to take whatever the market will pay . Parts go up fuel fertilizer and chemical go up tires go up grease and oil I cant take my calves to the buyer and say I need more money for my calves hell laugh and say my costs are up you get less

Profits always attract competitors. That includes other farmers competing for inputs. There is no cartel setting farmland values, farmland rents or feeder animal prices. It is always what the last farmer bidding is willing to pay. Right now farmers are coming off a fantastically profitable year and they have cash to burn. They may complain about high input prices, but very few are making any major changes, not even adjusting the amount of fertilizer applied to get the best return.

In reality it is the demand from farmers as a group that have the largest influence on many of the input prices. If corn was $2.50 and soybeans were $6 few would be willing to pay high farmland prices or rents and those costs would drop with falling the demand.

One of the best indicators of farm profits is the price of farmland, it is the Dow Jones Industrial Average of farming.