<b>By SHELLY STRAUTZ-SPRINGBORN<br>
Michigan Correspondent</b> </p><p>
 
LANSING, Mich. — While commodity prices are expected to remain high in 2008, market volatility and increased input costs are a constant threat to farmers.<br>
Some agricultural economists are predicting that farmers could receive near-record prices for their corn, soybeans and wheat this year.<br>
But, with input costs on the rise and the potential for uncooperative weather conditions, there’s no guarantee growers are going to reap the benefits of what they sow.<br>
Bruce Noll, who farms about 600 acres of corn and soybeans near Crystal, Mich., has all of his inputs purchased for this year. But, like most farmers, he worried about availability and pricing until he paid for his fertilizer, seed and chemicals.<br>
“I think they’re kind of like the oil companies, they’re taking advantage of the situation,” Noll said of agricultural suppliers. “They see high crop prices and they’re kind of riding that wave.”<br>
Anticipating even higher prices as well as shortages of inputs, Noll has purchased everything he needs for his 2008 crops.<br>
“I had to speak for it earlier and I got it paid for to guarantee the prices,” he said. “They wanted pre-pay to get it locked in, and wouldn’t guarantee a price until I paid for it.<br>
“Prices have gone up considerably. Nitrogen is at least a third higher than last year. Potash is out of this world and phosphorus is high, too.”<br>
According to the USDA Agricultural Research Service, the average prices paid for fertilizer last year were $453 per ton for urea, $442 per ton for Diammonium Phosphate (DAP) and $280 per ton for potash. This compares to $276 per ton for urea, $275 per ton for DAP and $181 per ton for potash in 2004. Several fertilizer dealers in Michigan will not yet quote a price for potash for 2008 and will not guarantee a price for urea unless it is prepaid.<br>
With the increased input costs, Noll said even with higher commodity prices, he’s not banking on getting rich this year farming. However, he does expect that farmers “can make some money” if the weather cooperates.<br>
“I think we’re going to be about where we always are,” he said. “My dad used to say the farmer is the last one on the totem pole, and he’s going to get what’s left.<br>
“My cost of production is going to be $2.83 per bushel for corn this year. Prices have been so variable that I haven’t got as much contracted as I sometimes do. Everything that I read is that prices are going to go even higher.”<br>
Another of Noll’s concerns now is whether he will get enough moisture during the growing season, remembering last year’s drought throughout much of Michigan.<br>
 “The farmer is taking all the risk,” he said. “There’s no guarantee that we’re going to have a bumper crop. There’s a 50-50 chance we’re going to have a drought. If we don’t get yields, we’re still going to have all those costs. If that’s the case, we’re sunk. If we get good yields, I think there’s an opportunity that we’ll make some money.”<br>
Jim Hilker, Michigan State University professor with the Department of Agricultural Economics and extension marketing specialist, said higher input costs are fueling a need for farmers to be even more aware of their cost of production when making planting decisions.
“One of the critical things that input costs have is to help farmers determine what they are going to plant,” Hilker said. “When we plug that into farmers’ budgets, right now it’s kind of interesting. In a typical Michigan budget, some farmers are moving back toward soybeans partially because of high nitrogen costs.<br>
“When we look at corn and soybean yield relationships, it’s a toss-up in some cases of whether to grow corn or soybeans. That’s how high corn prices are,” he said. “It really comes down to an individual farm budgeting decision and the need to calculate returns per acre.”<br>
Hilker said many Michigan farms could probably make a switch back to soybeans this year without jeopardizing yield potential.
“Last year, we made such a big switch to corn that we can probably go back to soybeans,” he said.<br>
“We had about 20 percent more corn and 12 percent less soybeans last year. We also had a lot of acreage come out of wheat.”