Patrick Redman looks over his herd. He downsized recently to accommodate higher medicine prices.
(Amy Bushman - WFIU/WTIU)
Patrick Redman is a fourth-generation farmer.
The farm has been a part of the family since the late 1920s when his great grandparents acquired the land.
“Back in those days, the family made full living off the farm,” he said. “This was one farm of many that he had lots of employees whose full-time living was made off the farm.”
But like many legacy farms, the family shifted away from taking care of the farm full-time.
When Redman came back from college to help manage the farm, he quickly realized that having a full-time job while also trying to direct a family farm was going to be a huge challenge.
“We made the decision then to start renting out our crop ground,” he said. “We still own it, but we have tenants that come in and take care of that. They pay yearly rent on that, and we concentrate more on the cattle and livestock.”
That helped lighten the workload, but a new problem emerged in more recent years; the cost to keep things going.
Input costs including diesel fuel and fertilizer went up significantly in the last few years, and it has made farming of all different sizes more challenging.
“Our average tractor is going to burn eight gallons of fuel an hour,” he said. “We're paying $2 more a gallon than what we were before. Now all of a sudden, for one tractor you're looking at another $60, $70, $80 a day in fuel by the end of a five-day week. It’s an extra $500 a week, $2,000 a month, four months out of the year.”
And then there’s all the little expenses that you must be accounted for. Redman said for example, the filters he has to replace every few months in his equipment shot up last year as well.
“This tractor, specifically one of them over there, used to always cost about $500 a year to buy the filters, last year $1100 to buy the same filters,” he said. “And you had to wait a month to get them!”
One of Redmans tractors, the cost to maintain which increased last year. (Amy Bushman - WFIU/WTIU)
Even vitamin shots and vaccines for cattle have seen massive price increases in the last few years.
“That cost doubled two years ago,” he said. “And so I say that the filters, the vaccines, you're not talking $100,000, you're talking what used to cost three or $4,000 now cost seven or $8,000. Those are the things that are killing us.”
Worst of all though is the price of fertilizer – which Redman said increased by nearly 80% last year. Specifically, nitrogen was nearly $1,000 a ton, up from $400 a ton.
That increase happened because of complex, interconnected issues on the supply side of the supply-and-demand equation.
According to Todd Davis, the chief economist of the Indiana Farm Bureau federation, it started back in August of 2021 when hurricane Ida hit Louisiana, affecting the production of anhydrous ammonia.
“Louisiana is a major hub for petroleum and natural gas, but also for production of anhydrous ammonia,” he said. “The largest plant that makes anhydrous is in Louisiana. And that plant produces about 20 percent of the U.S. capacity. So that plant was affected. That was a big loss in the production of anhydrous.”
Anhydrous Ammonia being stored at Nutrien Ag Solutions in Switz City, IN. (Ella Miller - WFIU/WTIU)
In September of that same year, China, the leading producer of phosphates, banned exports of the chemical compound. They also reduced the export of urea, another nitrogen fertilizer.
The 2022 cold snap in Texas then reduced gas production, which in turn slowed state-side fertilizer manufacturing. Finally, the war in the Ukraine disrupted supply chains out of Russia, another large producer of fertilizer.
“Even though fertilizer was excluded from any sanctions, this sort of disruption of trade flows does trickle back and affect the fertilizer market,” he said. “Even though Russia can technically export fertilizer, and they are the top exporter of anhydrous ammonia and about 12 percent of the world's phosphate, they've really had their trade flows disrupted because of the war.”
While prices have cooled a little, farmers outlooks are still overall sour on input prices, with high interest rates and decreasing land values also causing concern.
“Farmers use their land as collateral for their business,” he said. “As land values fall, then you're going to have their collateral get a little more tenuous. And so it really just trickles through the whole ag economy.”
Urea, a nitrogen fertilizer, in its pellet form. (Ella Miller - WFIU/WTIU)
Shellye Suttles, an assistant professor at IU’s O’Neil School of Public and Environmental Affairs, said the issue with input prices being high is that agriculture is a market where producers are price takers. Farmers are unable to charge more for their crop just because they had to put more money into producing that crop.
“There is some regional or national price that people will pay for a bushel of corn,” she said. “And a farmer will in most instances have to just take the price at this current market or regional price.”
In Redman’s case, when the price of vaccines for cattle increased, the price of beef didn’t increase with that cost. He now makes less profit per cow. He then decided that because of that, he’d decrease the size of his herd to compensate for the added cost.
“When the cost of production remains high, but producers decide not to produce that annual crop the next year, that means that when the supply is constrained, and if nothing changes about consumer demand, ultimately the prices will increase because of scarcity,” she said.
For Patrick Redman, it all speaks to the idea of what it means to be a farmer in 2023. So much of what makes a farm successful or not comes down to factors that can’t be controlled.
“In today's ag world, especially in every industry, it's no longer what's going on in this state or this country,” he said. “It's what's going on around the world. And it's a lot of roulette at the craps table.”
Planting season in Indiana is over halfway complete, with 56 percent of corn and 52 percent of soybeans planted so far. It has yet to be seen how this season’s commodity prices will affect Hoosier farmers come harvest time.
