Farms will pay significantly more for operating expenses this year. 2022 planning budgets from the University of Missouri can help livestock, row crop and forage operations quantify how much costs have increased and determine what those higher costs mean for the bottom line.
For crops, fertilizer represents one cost that has sharply increased in recent months, says Ryan Milhollin, extension agricultural economist.
“Fertilizer prices have gone through the roof since October,” Milhollin said. “I don’t think anybody would have predicted fertilizer prices doing what they did.”
Ben Brown, senior research associate at MU, says fertilizer costs and other variable expenses, such as labor, fuel and chemicals, have increased due to supply chain disruptions and market conditions. Fixed costs, such as those for land and machinery, have also risen based on expected returns in 2022 and increases in the money supply.
Livestock producers can expect higher costs for inputs such as protein supplements, grain, salt and minerals and labor.
Each 2022 planning budget estimates the total economic costs involved in an enterprise. Those costs include cash expenses and opportunity costs, such as those for owned land and your time.
You can tailor each budget to fit your farm and understand your cost structure for each farm enterprise. With this information, you can then determine how to best control input costs, set price targets for the year or size up and down farm enterprises to maximize profits.
“We really want to empower and encourage farmers, lenders and other people who use these budgets to customize them for their situation and when they need to make a decision,” Milhollin said.
MU Extension enterprise planning budgets and spreadsheets for customizing budget assumptions are available for free download at muext.us/MissouriAgBudgets(opens in new window).