Recent data from the USDA shows that the gap between the annual costs farmers pay and the price they receive for their crops is one of the widest in a decade. But experts say there’s more to the story.
The price index reflects the worsening financial situation farmers have been facing for at least three years. The index is data collected through surveys, where farmers report what they paid and what price they received for their crops. Then, those numbers are compared against data from 2011 to create an index.
Nick Paulson, an agricultural economist with the University of Illinois, explained why these indexes might be more complicated.
“I think a couple of caveats to that," he said, "in no way to downplay the severity of the financial stress that's out there right now for row crop producers… 2011 did happen to be a pretty profitable period."
He stressed that it’s important to consider that bigger context, while acknowledging the tough time farmers are facing.
Paulson suggested that farmers should consider where they can cut costs in their operations.
“Now is as important a time as any for farmers to be as efficient with their fertilizer application and application rate decisions as possible," he said, "and there's been a lot of work that we've seen showing that there is room for farmers to probably take a look at their application rates and reduce some of their fertilizer use without negatively impacting profitability.”
He said prices for inputs like fertilizer are increasing, and prices farmers are getting aren’t rising fast enough to meet them.