EasternIowaFarmer_Fall2022

THE COST OF FARMING
“My rough math
is that the direct
inputs for the 2023
corn crop – seed,
fertilizer, chemicals,
etc. – are going
up about 80 cents
a bushel from the
2022 crop.
— GREG GANNON
prices right now, but we need them,” Bowman
said. “This fall if we have good yields, I think
it will be an ok and maybe a good year. What
I’m concerned about is the downturn. When
you’ve farmed as long as I have, you’ve seen
this pattern before. Our commodity prices top
out or soften and go lower, and expense prices
don’t. That’s where the real pinch is.”
His concerns mirror those of other Eastern
Iowa farmers who are fresh off a year of strong
crop prices and solid profits that mirrored
conditions from about a decade ago. But today
local ag producers are navigating choppy
waters that also include the impact of Russia’s
war against the Ukraine on food supply
and fertilizer prices, as well as the effect of
lingering supply chain interruptions that began
during the pandemic. That’s in addition to the
specter of inflation, increasing costs for fuel
and other inputs, and rising interest rates.
And while Bowman and fellow farmers in
Eastern Iowa may feel some heartburn talking
about the challenges, there are profits to be
made, especially with some strategic planning
and maybe a little luck, some in the local ag
industry said.
“My rough math is that the direct inputs for
the 2023 corn crop – seed, fertilizer, chemicals,
etc. – are going up about 80 cents a bushel
from the 2022 crop. Presently, we’ve got corn
a little over $6 a bushel. Despite the increase
in costs, those are still profitable levels,” said
Greg Gannon, president and chief executive of
DeWitt Bank & Trust Co., who also is a farmer
in Clinton County.
Among the list of challenges top on the
minds of producers he speaks with are the
availability of fertilizer (Russia and the
Ukraine are big suppliers) and chemicals,
Gannon said.
On the plus side, he ticks off healthy liquidity,
a low degree of leverage, strong borrowing
capacity, and appreciating land and equipment
values.
“What we see from our customer base is
balance sheets are strong and there’s a good
amount of liquidity. And even if prices drop
and profitability is diminished, there’s enough
strength in reserves available so it’s not a dire
situation,” he said.
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42 EASTERN IOWA FARMER | FALL 2022 eifarmer.com