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THE COST OF FARMING<br />
“Costs have increased<br />
fast enough that there<br />
isn’t room for us to make<br />
much more margin<br />
and still be palatable<br />
for the customer.”<br />
— JUSTIN PAULSON<br />
balancing act.<br />
“Seed prices are going up, but it’s not<br />
because we are increasing our margins necessarily,”<br />
he said. “We have to pass some<br />
of our increased costs on; we’re not here<br />
to lose money. Costs have increased fast<br />
enough that there isn’t room for us to make<br />
much more margin and still be palatable<br />
for the customer. Also, with our specialty<br />
crops, we are often competing for acres.”<br />
Like many local ag businesses, Welter<br />
operates with a small staff whose members<br />
handle multiple aspects of the operation.<br />
“Large companies, the Fortune 500<br />
businesses, have a team of people who look<br />
at every aspect of costs and expenses on<br />
the hour,” Paulson said. “We aren’t able to<br />
analyze every cost factor such as, ‘That’s<br />
costing us X %, X cents per mile, per trip,<br />
etc. We’re probably working more around<br />
generalities. We don’t have the staff of<br />
people to always figure down to the last<br />
penny.”<br />
While some businesses in the ag input industry<br />
change their prices daily in response<br />
to economic impact, seed businesses<br />
generally don’t. Welter sets prices for small<br />
grains twice a year, which allows them to<br />
adjust. It pays premium prices for quality<br />
grains such as wheat, barley, rye and oats<br />
from certified growers in a five- or six-hour<br />
radius throughout the Midwest who are<br />
absorbing their own price increases.<br />
That allows farmers some ability to plan<br />
for that specific cost, Welter and Paulson<br />
said, adding that they rely on strong relationships<br />
and good communication with<br />
their customers.<br />
“Once that price is set, it typically is not<br />
going to go up unless we have to replace<br />
product at a higher cost,” Paulson said.<br />
The story of higher costs and longer delays<br />
are being felt at every level of farming.<br />
The costs for shipping freight by truck<br />
has more than doubled, Welter said. That<br />
upward trend started during the pandemic.<br />
And for specialty products, in particular,<br />
that tips the economies of scale. For example,<br />
bringing in organic barley grown by a<br />
Nebraska supplier to Iowa will cost a lot<br />
more than if the grower was selling it to a<br />
local market.<br />
MOOOVE<br />
OVER!<br />
Dr. Luke Thole • Dr. Tom Lapke • Dr. Chris Rock<br />
there’s a new<br />
doc in town<br />
Dr. Logan<br />
McQuillen<br />
ROLLING HILLS<br />
VETERINARY SERVICE<br />
Cascade: 1103 1st Ave E.<br />
563-852-3237<br />
LaMotte: 113 S. Main St.<br />
563-773-2771<br />
62 EASTERN IOWA FARMER | FALL 2022 eifarmer.com
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