Economist: Spud production costs should steady a bit
Patterson: Fertilizer suppliers expected to increase production
By JOHN O'CONNELL
Idaho potato farmers should see more moderate increases in production costs in 2013 than they've experienced in recent years, University of Idaho Extension economist Paul Patterson predicts.
Patterson said potato growers' input costs should increase 2 to 4 percent per acre this season, and fertilizer, seed and fuel costs will likely decrease. Inputs rose 5 to 8 percent per acre last season and 14 to 16 percent per acre in 2011.
Fertilizer prices posted steep gains in 2012, with urea up 14 percent, liquid nitrogen up 8 percent, phosphate up 6.6 percent and potash up 10.7 percent. He predicts in 2013 average urea prices will decrease by 1.5 percent, liquid nitrogen will be down 3 percent, phosphate will drop by 3 percent and potash will drop by 4.5 percent.
Patterson said fertilizer suppliers have increased production capacity. He also believes demand may drop if commodity prices dip. He suspects phosphorus carry-over in soil due to a low-yielding 2012 corn crop should also reduce demand.
Nitrogen, which is derived from natural gas, is cheaper because of sharp decreases in natural gas prices and increased domestic production.
Potato seed could decline by as much as 4 percent, Patterson said. Farm diesel, which averaged $3.50 per gallon in southcentral Idaho in 2012, should average $3.40 this season, down 3 percent, because of adequate supplies and reduced demand in the U.S., he said.
Tyler Harker, fuel manager with Bingham Cooperative in eastern Idaho, disagrees, expecting fuel prices will increase. Although crude oil supplies are abundant, he said finished diesel inventories are short.
"A lot of growers have already topped off their tanks anticipating prices will be high," Harker said, adding farm diesel price has risen 50 cents in the past four weeks.
Chemical prices shouldn't increase more than 2-3 percent, Patterson said. However, he anticipates growers could spend 8-15 percent more on chemicals this season if they have to expand insecticide programs for zebra chip, a relatively new potato disease to the Pacific Northwest.
Though he budgeted an increase of no more than 2 percent for custom applications and consulting, he said growers could pay 5-12 percent more for those services due to the need to spray fields more often for zebra chip.
Land, which increased 4-7 percent in price in 2012, should increase by no more than 4 percent, he said. Following a tough season for fresh potato prices, he expects less pressure on land rents from growers seeking additional potato acres.
Andy Smyth, a licensed Realtor in Caldwell specializing in agriculture, knows of good farm land in his area selling at $7,200 per acre.
"You just keep thinking it's reached the peak, but it hasn't," Smyth said. "I look for (land) to remain strong through at least this year, and after that all bets are off."
Declo grower Mark Darrington always keeps a close eye on labor, repairs and machinery costs.
"Anything that has iron in it, it costs more money," Darrington said of equipment.
Patterson predicts labor will increase 1-2 percent, and machinery will increase 3-4 percent.