From being nestled under soil, piled into trucks, sent down conveyor belts and driven on to Walmart, Kroger and Aldi stores, the potatoes from Reid Mattive’s San Luis Valley farm have never been more expensive to grow.
Tires and machinery are hard to locate. The prices for fertilizer, fuel and fungicides are spiking. Mattive, a fourth generation farmer, may hold off on making upgrades to buildings or have to lay off some of the 65 workers who work in his fields and packing shed — a blow to a region whose driving economic force is agriculture, he said.
“It puts the squeeze on us,” he said. “(We) can’t shut off the lights and walk out of the building.”
Colorado farmers battling drought conditions and narrow profit margins are being hit with cost increases for pesticides, fertilizer and other supplies as global supply chains sputter in the wake of the pandemic. Coupled with shortages, the price hikes are the most disruptive in decades for some agricultural businesses and family farmers, who were facing steadily rising costs even before the pandemic hit.
The increases and delays come as there’s a shortage of truck drivers and workers on loading docks and in warehouses, and as freight shipping and fuel have become more expensive. Fertilizers imported from abroad could be subject to new tariffs that could be financially devastating for farmers, industry representatives say.
The pain doesn’t stop at the farm fenceline: Food costs have gone up for consumers from about a year ago, a 5% to 6% increase for meats and fresh fruits, according to data compiled by the U.S. Department of Agriculture’s Economic Research Service.
International markets were upended by pandemic-related disruptions to supply chains, that in recent decades have become increasingly global and responsive. Boats stuck waiting to be unloaded at California ports have ripple effects that blow back to plants in Asia, on to suppliers in the U.S., and eventually hit small business owners, grocery stores and customers. A winter storm that crippled Texas’ infrastructure in February and a shift to more online shopping have further disrupted supply chains.
The effects have been acutely felt by agricultural suppliers and farmers, who already contend with risks tied to weather, crop yields and pests, and topographical challenges in mountainous Colorado.
“All of our fears of COVID 2020 that didn’t happen have shown up in 2021,” said Dallas Vaughn with Flagler Aerial Spraying, which sells fertilizers and other supplies to farmers. “It’s just been way worse than we’d ever anticipated.”
The cost of fertilizer for Vaughn is now $28 a gallon, up from $11. The cost to transport a load of the herbicide paraquat to Colorado from a coastal port was $8,000, up from the $4,000 he expected. It took six weeks to find truckers to take the herbicide, which is a hazardous material, when it “should have taken three days,” Vaughn said. In July, he received a batch of glyphosate that he’d ordered in January.
“That’s how far behind the supply chain is on product,” he said.
To contend with its increased costs, the company has raised its prices and Vaughn said they went to their bank to ask if they could raise a working capital line “because we’re literally paying double for all of our inventory.”
His average wheat customer who would have spent $16 to $18 an acre on fertilizer last fall is now spending $29 an acre this year — a roughly $20,000 increase for a 2,000-acre operation.
“It’s not just us — it’s everybody in the industry,” he said. “Everybody’s facing it.”
The recent closure of part of Interstate 70 running through Glenwood Canyon has compounded the struggle to move and receive key products in the area around Western Colorado, said Jenny Beiermann, an agriculture and business management specialist at CSU Extension in Grand Junction. The affected portion of the interstate, Colorado’s main east-west highway, has a lane open in each direction but will be under construction for months.
Farmers on the Western Slope are seeing larger than usual numbers of grasshoppers due to drought and some are having trouble controlling them due to the increased costs and shortages, she said.
The supply chain problems come as tariffs have been added to phosphate fertilizers from Morocco and Russia and as more could be imposed on nitrogen fertilizers imported from Russia and Trinidad and Tobago. Fertilizer accounts for more than a third of operating costs for major U.S. crops and the U.S. Department of Agriculture has projected the price of fertilizer will rise 5% in 2022 even without the new tariffs, according to the Colorado Farm Bureau.
Shawn Martini, a vice president with the Colorado Farm Bureau, said there could be a “nearly catastrophic” effect if the duties take effect.
Chemicals used in pesticide compounds increasingly come from China, said Dawn Thilmany, an agricultural economist at Colorado State University. China, a top market for U.S. agricultural exports, has been locked in a trade war with the U.S. and there are relatively high tariff rates — around 20% — on exports and imports between the countries, said Amanda Countryman, another Colorado State University agricultural economist.
Vaughn, the fertilizer seller, said his business has grown as customers facing the same supply chain problems at large suppliers turn to other operators. There’s also been good weather on the Eastern Plains, a swath of the state that has remained largely drought-free, leading to high crop yields and more weeds.
The company has tried to buy more inventory upfront so they have it on hand, though that’s risky because the price or the demand could drop, leaving them with products they don’t need or overpaid for.
“We’ve pretty well just been on a straight up from a price and cost standpoint and a downward spiral on supply,” he said.
Supply chain shortages affect machinery
The supply shortages extend to machinery and technology. Officials with agricultural equipment giant Deere & Co. said in May quarterly earnings reports that the manufacturer expects to see “increased supply-chain pressures through the balance of the year,” and that lack of semiconductor chips was a problem.
Marc Arnusch, who grows seed crops and brewing grains on a 2,000-acre farm in Keenesburg, said the semiconductor shortage has made it difficult to buy tools used to auto-steer tractors, control his farm’s irrigation system and sense moisture in the soil.
The technologies help him track “every water droplet” as the state has faced water shortages. Without them, he said, it can feel like the farm’s four employees are “rummaging around in the dark.”
The farm for several years has already moved to grow less thirsty crops, like seed wheat and barley, and grains for the craft spirits industry instead of more water-intensive corn and alfalfa.
Increased costs for tractor parts and other supplies mean farms will have a lower return on investment. They could face further slowdowns if a tractor breaks and must be taken out of commission because it can’t be fixed quickly, said Audrey Rock, who has a 7,700-acre family farm in Yuma. The family also raises bison and has a 6,000-head feedlot.
She has tried to pre-order fertilizers or chemicals to kill weeds and insects on the farm. But if there’s an emergency that requires an unplanned purchase, “you’re going to have quite a wait” and then have to pay “a fairly high cost,” said Rock, who faced a six-week delay to replace a tractor track that would ordinarily take a week.
“I would like to think we are a very resilient sector,” she said. But “if it becomes too expensive to farm I’m afraid many individuals won’t be able to continue.”
Pesticide costs may prompt the use of alternatives
Farmers unable to find their usual herbicides may fall back on alternatives like tilling the soil to remove weeds, or using less effective or more expensive chemical products that are sprayed onto crops.
Weed control specialists and farmers say tillage can degrade soil quality by destroying root systems and hastening erosion, outcomes they hope to avoid as Colorado grapples with water shortages.
Nathan Weathers, a seed supplier and farmer in Yuma, has tried to till as little as possible for about a decade, and has been strip tilling corn for 20 years to let more organic matter build in the soil, he said. That means the farm tills just an 8-inch wide strip to plant the crop row.
But as the cost of herbicides has increased about 20% — if Weathers can find the products at all — he returned to tillage in June, running a cultivator through the cornfields to clean out weeds. He spread fertilizer at the same time to get a benefit from running the machine, which better disperses it, he said.
The price of other products has gone to $25 an acre from $15, equating to a $30,000 increase for his 3,000-acre farm, where Weathers raises corn, soybeans, irrigated grass for cows, and other products.
“We’re not going back to maximum tillage like we used to,” said Weathers, who has worked 17 growing seasons since he graduated from college. “We’re trying to be smart about it because we’re trying to take care of what we’ve done.”
Tillage isn’t an option for every farmer. Some sold machines used to till the fields since the no-till movement took hold several decades ago. For others, the increased cost of fuel negates any savings from not buying herbicides.