By TIM ALEXANDER
Illinois Correspondent

URBANA, Ill. — Corn producers know all too well the factors behind the rising costs for planting, raising and harvesting their crop: out-of-control fertilizer, fuel and seed prices.

USDA economists are projecting an increase of more than 9 percent in overall farm production costs in 2008, after an 11 percent spike in 2007.

Producers who waited until spring to purchase inputs are being hit the hardest, the USDA said.

While fertilizer and fuel costs are identified as the main culprits in rising production costs, seed costs for principal crops are on the rise as well. If seed costs rise around four percent this year - as predicted by the USDA’s Economic Research Service - farmers will be paying some 17 percent more than they did two years ago.
Overall, seed expenses are forecast to increase around $500 million in 2008, leading to double-digit increases in earnings growth for some of the major seed and fertilizer companies, according to a recent USA Today report.

“Following a very strong 2007, 2008 is shaping up to be a spectacular year (for agricultural suppliers),” Goldman-Sachs analysts announced in a recent report titled Let the Good Times Roll, according to the article. Specifically, the article states, DuPont’s agriculture and nutrition arm, which includes Pioneer Hi-Bred, “is predicting double-digit earnings growth through 2012 because of the strong farm economy and DuPont’s new seed and pesticide products.”

Pioneer’s worldwide seed sales were up 40 percent in the last quarter of 2007, when many farmers were purchasing inputs for the following spring, while 2007 was “absolutely spectacular” for rival Monsanto, according to executive vice president Brett Begemann.
According to the USDA, seed prices have been rising rapidly since 2000 due to bio-technology advancements and the resultant improved yield potential.

Ron Litterer, president of the National Corn Growers Assoc., told USA Today that farmers are willing to pay more for inputs when their crop is more valuable.

The USDA has forecast 2008 net farm income to be at a record level of $92.3 billion, up 4.1 percent from 2007. Net cash income is forecast at $96.6 billion, an increase of $9 billion from 2007.

Help on the Way?

While seed and other input costs may never return to pre-2000 levels, industry scientists are hard at work seeking new ways to improve the efficiency and productivity of everything from seed hybrids to fertilizers.

In order to help cut production costs for corn farmers, DuPont and Arcadia Biosciences, Inc., recently announced a research and commercial agreement to improve nitrogen use efficiency in corn.

“This collaboration gives a significant boost to the progress we’ve already made in developing corn hybrids that use nitrogen more efficiently,” stated Bill Niebur, DuPont’s vice president of crop genetics research and development, in a news release dated March 13.

“We look forward to partnering with Arcadia to further develop a technology that will help farmers increase the productivity, profitability and sustainability of global corn production.”

Eric Rey, president and CEO of Arcadia, said the technology would help reduce the global carbon footprint of agriculture as well as bolster farmers’ bottom lines. “The end result will be products that significantly improve farm economics,” Rey said.

Details of the new technology, which would improve the ability of corn plants to absorb nitrogen, were not provided in the news release.