Experts predict flat 2014 input costs

John O'Connell/Capital Press University of Idaho Extension economist Paul Patterson presents his projections for 2014 farm input costs. Patterson expects inputs will hold flat or decline slightly.

Experts who track Idaho farming inputs are optimistic that agricultural expenses will hold relatively flat in 2014, largely due to reduced demand caused by softer commodity prices.

“I think pretty much we’re going to be flat to down slightly for input costs this year,” University of Idaho Extension economist Paul Patterson said.

Patterson’s prediction follows a 2013 growing season in which input costs were also flat, but amid a decade of steeper than usual input cost gains.

An exception may be power costs. In 2013, he estimates Idaho Power’s cost to pressurize an acre-inch of canal water from a center pivot was $1.90, up 22 percent.

“When I did my budget this last year, I was pretty close on everything, but that power is what kicked my butt,” said Idaho Falls surface water irrigator Matt Gellings. “I figured $25-$30 per acre. It ended up being close to $55-$60 per acre.”

Patterson expects the magnitude of 2014 power increases will depend on the power cost adjustment, new environmental regulations affecting Idaho Power’s coal-fire generation and 2014 temperatures.

Seed prices have made 15 percent average annual gains for a decade, driven by increased demand as strong commodity prices prompted growers to step up planting, Patterson said. In 2014, he expects lower corn and dry bean seed prices, flat grain, alfalfa and sugar beet seed prices and higher potato seed costs.

“I would look to see our wheat stay the same or go down slightly, especially where wheat prices have been,” said Wayne Palmer, an owner of Nelson’s Seed Co. in American Falls.

Palmer predicts alfalfa seed prices could rise 20 cents per pound by spring. He said Roundup Ready alfalfa seed supplies are especially tight.

St. Anthony grower Dirk Parkinson predicts potato seed prices will average $12 per hundredweight, up 20 percent from last year. Seed potato production held steady in Idaho in 2013, but was down elsewhere in the country. He expects a shortage of Russet Norkotah seed.

Farm diesel prices have held the same as in 2012, averaging $3.50 per gallon. Patterson expects greater domestic fuel production and reduced global demand will continue the flat trend in 2014. AAA Idaho spokesman Dave Carlson said the U.S. has become a net refined petroleum exporter, and China’s slowing economy has reduced global consumption.

Patterson predicts machinery and chemical prices will rise only slightly, with farmers investing less in their crops due to softer commodity prices.

Valley Agronomics crop adviser Brian Miller believes chemical prices will rise slightly so companies can recoup research costs of new products, but he acknowledges they may “take a little less profit margin to move that product.”

Patterson projects a slight decrease in fertilizer prices, noting high prices led to new mines opening. Miller said reduced planted acreage due to softer commodity prices should also keep fertilizer costs in check.

Patterson expects availability challenges will contribute to a 1-3 percent increase in labor, and interest rates should remain low through 2014.

Doug Robison, with Northwest Farm Credit Services, said the supply of land remains “ultra tight,” and he expects slight increases in land values in 2014, but nowhere near the rapid growth of recent years.

Recommended for you