Hoosier Banker 21 someone who finances agriculture. There are some positives, however. First, as mentioned previously, commodity prices have seen increases as well. The same February USDA report had a 25% increase in expected net farm income for 2022 compared to 2021. Commodity prices also have seen substantial upward movement since that USDA report was released. Much like fuel, prices for wheat and other cereal grains that are grown in Ukraine and Russia saw rising prices. This is due to worries that these countries will be unable to either grow, harvest or export their 2022 crops. As a result, other countries that normally rely on Ukraine or Russia for these commodities may turn to the U.S. as suppliers. Obviously, there is much uncertainty surrounding these world events. While resolution to these issues would help ease input prices for farmers, especially for fuel, resolution also would likely cause decreases in commodity prices. It is therefore difficult to estimate what the impact of such resolution would be for farm income. Farmers who have not locked in prices – or are unable to lock in prices, in the case of certain inputs – need to plan for further increases in inputs in the 2022 crop year. Producers, and their bankers, need to be examining how a 10% further increase to production expenses and a 10% decrease in commodity prices will impact income for farmers. In times of extreme volatility like we are currently experiencing, locking in prices for both inputs and outputs may be a smart move to preserve existing margins. While there is a chance that output prices may continue to increase, or that input prices reverse trend and ease downward, there also is a risk that neither will happen. The bottom line is that farmers and bankers need to be aware of these rising costs. Previously prepared budgets need to be revisited for possible adjustments to this year’s crop plan. If a farmer applies above the maximum return to nitrogen, which many do, this year may be a good time to experiment with lower levels of application. If a farmer can preorder and lock in the price of an input, that option needs to be examined as well. On the output side, farmers’ marketing plans also should be re-examined. While prices are currently at levels that lead to positive farm income in most cases, that is not guaranteed. In fact if prices come down even slightly, this could put some farmers in the red. Farmers need to price out their crops and determine what actions, if any, should be taken to maintain positive margins for 2022. HB CINNAIRE.COM It takes more than good intentions to transform communities. It takes capital, development capacity and trusted partnerships. In 25 years, we’ve delivered more than $7.3 billion in community impact. Overcoming challenges. Solving problems. Backed by a commitment to creating healthy communities that has never wavered. The Return on Investment: Safe, Affordable Homes. Healthy Communities. Better Lives. INVESTING IN INDIANA COMMUNITIES FOR MORE THAN 25 YEARS. Transforming Communities. Transforming Lives.
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