High Input Costs Require a ‘Sharp Pencil’ to Assess Farming Operations

The escalating price of fuel and fertilizer is a major concern for agricultural producers. High grain and cattle prices don’t turn profits when input costs keep farmers and ranchers in the red.

Want a snapshot of a farmer’s checkbook? As of December 2021, the U.S. Department of Agriculture’s Economic Research Service estimates an annual price increase of 235% for anhydrous ammonia, 149% for urea and 192% for liquid nitrogen.

Soil testing

To combat skyrocketing input costs, Oklahoma State University Extension specialists recommend evaluating operations and taking an honest look at management practices. For farmers, that starts with a basic soil test.

Inexpensive soil and forage testing is offered at each of Oklahoma’s 77 county Extension offices where samples are collected and submitted to the Soil, Water & Forage Analytical Laboratory at OSU.

For producers who’ve done composite soil tests in the past, now is the time to consider grid sampling or submitting samples from several zones. Soil analyses help implement smarter and more efficient application strategies. For example, when tests indicate low phosphorous and potassium values, farmers can improve the soil’s quality by applying phosphorous in a band instead of a broadcast.

Amid expensive inputs, more specialized fertilizers and microbial products are hitting the market at a lower price point. However, Arnall said there isn’t enough information known yet about the new products to fully understand their benefits.

“We’re still learning. OSU Extension is trying to get a handle on what works well for Oklahoma soils because many biological products may not be developed for our Great Plains environment,” he said.

The price of herbicides has also increased, and limited quantities are available. Locking in a set price for fertilizer or herbicide months in advance saves money, but some suppliers don’t offer that option. When products can be purchased in bulk at a reasonable cost, Arnall recommends on-farm storage. Developing a crop rotation plan and identifying what products will be needed to improve soil quality and treat weeds are basic practices all farmers should follow when facing unpredictable input expenses.

Livestock and forage management

For cattle producers battling high costs, Brian Pugh, OSU Extension northeast area agronomy specialist, said it’s a matter of knowing the numbers. The spike in prices led Pugh and several other Extension specialists to organize a series of workshops through April 27 on how to mitigate rising costs. The six-module curriculum focuses on animal health, general livestock, ag economics and agronomy.

“We recommend every producer sit down and complete a forage budget – how much forage can you produce on your acreage in a year and how much forage does your cowherd need?” Pugh said. “What we find is a lot of producers are overstocked, but they don’t know it because they haven’t done a basic calculation to determine a forage surplus or deficit.”

In addition to a forage quality analysis, Ag$ense workshop participants are also asked to use a ration/nutrition calculator to understand what feed or supplements cows need to meet their daily protein and energy requirements. The hands-on exercises teach ranchers what management practices to use based on their forage quality. Pugh said many producers don’t know they’re losing money on their cow/calf operations because they haven’t analyzed their budgets.

“It’s a hard conversation when the numbers show it might be critical to reduce cattle numbers,” he said. “We try to promote first and foremost to make the cow do the work. Make the cow harvest her own forage as many days as possible, and that adds up to a lot of savings.”

Pugh said research shows spending less on feedstuffs results in a more profitable operation even if ranchers must spend more money upfront on fertilizer for their forage. Varieties introduced to Oklahoma pastures 30 years ago produced more forage than native grasses, allowing ranchers to increase herd numbers. Also, throughout the 1980s and 1990s, fuel, feed and fertilizer were relatively cheap, Pugh said, making it cost-effective to run more cattle on the same amount of land.

When cattle markets are high like they are today, cow fertility and sound herd health are more important than herd numbers. The Ag$ense workshops challenge ranchers to examine their operations and closely follow cash flow. Pugh explained more cattle doesn’t necessarily mean more profit.

“Having more cows can actually result in more losses for the operation,” he said. “Learning how to be efficient with forage and cows, genetics, economic decisions – all the little things that add up – it’s helpful to put a sharp pencil to all of those factors.”

Gardening and lawn care

Homeowners and gardeners may also encounter higher prices this spring. David Hillock, OSU Extension consumer horticulture specialist, echoed Arnall’s emphasis on soil testing.

“A lot of our turfgrasses can get by with a lot less fertilizer than what we think,” Hillock said. “A soil test can show how much fertilizer is needed, if any.”

Higher pesticide and herbicide prices will trickle down through the horticulture industry, Hillock said, and that could increase the cost of plants. This growing season, he suggested teaming up with fellow gardeners to purchase plants that can be divided and shared to minimize expenses.