According to a new report from the U.S. Department of Agriculture, farm and ranch production expenditures for the Plains Region totaled $99.2 billion in 2021, up from $85.3 billion in 2020 — a 16% increase.
The Plains Region includes North Dakota, South Dakota, Nebraska, Kansas, Oklahoma and Texas.
DaNita Murray is the executive director of South Dakota Corn. She said skyrocketing expenditures could push farmers away from "high-input" crops — those that require expensive fertilizer, pesticides and other extras.
"Growers everywhere are not going to infinitely decide to plant corn or any other crop if inputs, or whatever other factors exist, makes it impossible or almost assured, that they will not make any profit," Murray said.
Reid Christopherson is the executive director of the South Dakota Wheat Commission. He said inputs are likely even higher than what USDA is reporting.
"16% sounds very low beyond what, probably, the reality is when you look at all levels of input costs, whether that's seed, fertilizer, certainly diesel fuel, cost of labor, general household living costs, equipment repairs. And land ownership or land rent plays a significant role," Christopherson said.
The wheat price is coming back down after hitting record highs, which were largely associated with droughts in the U.S. and the Russian invasion of Ukraine.
Christopherson said falling wheat prices and rising input costs are forcing farmers to get creative.
"It's going to become tighter and tighter margins for producers," Christopherson said. "It's going to require a lot of strong thinking. A lot of management decisions. And certainly perhaps a lot of conversations with ag lenders."
Ranchers, meanwhile, have less of a safety net from insurance and subsidy programs.
Eric Jennings is the president of the South Dakota Cattlemen's Association. He said that reality has made rising costs harder to navigate as a rancher.
"They're a little tougher to take just because we essentially we just have to absorb those costs," Jennings said. "The extra costs and the ranching community, a lot of it is just the energy costs of having to buy fuel to get around to check on cattle or put up a little bit of hay. And then the materials cost, fencing materials, whether it's steel or wire or even posts."
Inflation, supply chain problems, a global pandemic, and war in Europe all play a part in the rising costs for producers.
