<b>By DOUG SCHMITZ<br>
Iowa Correspondent</b> </p><p>

JOHNSTON, Iowa — With the 2007 harvest completed and 2008 spring planting just around the corner, U.S. farmers will notice a significant rise in many crop inputs such as seed and fertilizer in 2008 as they start crunching the numbers this winter.</p><p>
“I’ll run the numbers several times and calculate different scenarios before I commit to anything,” said Gary Edwards, an Anamosa corn and soybean grower in eastern Iowa. “There are a lot of variables to consider, but I try to compare and contrast and then make final decisions so that I can take advantage of ordering products during the winter to obtain early-pay price discounts.”</p><p>
According to the Iowa Corn Growers Assoc., short supplies and big demand are causing U.S. crop input costs to take giant leaps as commodity prices and farm incomes rise, along with changes in crop acres and production practices also placing an additional strain on the supply chain.</p><p>
Steve Johnson, Iowa State University extension farm management specialist, said seed won’t be in short supply in 2008, but U.S. farmers should expect seed corn to increase five to 10 percent, and seed beans by a much smaller percentage.</p><p>
“Fuel cost will likely be 20 percent higher in 2008, as crude oil trades at record highs approaching $100 per barrel (in the fall of 2007), before the historic pattern of moving lower late this winter,” he added.</p><p>
To help track his bottom line in 2008, while adjusting to the higher crop input costs, Edwards said he’ll be using computer spreadsheets to help him calculate costs and make crop and profitability comparisons. He will also obtain estimated prices for seed and for inputs such as nitrogen, and P and K.</p><p>
Edwards said he will then list all of these costs and includes land rental prices, crop insurance and other considerations for corn on corn, corn on soybeans and soybeans in three separate columns, calculating the costs of each of those scenarios and making comparisons. As he crunches the numbers for 2008, he said he’ll also be careful to estimate crop inputs, knowing it will have a direct impact on profit margins.</p><p>
“Rental land prices and nitrogen are two costs that have risen, but overall, nearly everything has gone up,” he said. “It’s very important for farmers to review their costs and make the right decisions, which will help them be profitable in 2008.”</p><p>
Johnson said Edwards is just one of a majority of farmers who have likely made their crop rotation decisions this year, possibly already applying fall fertilizer and purchasing seed. But for those who haven’t, Johnson said there will likely be “sticker shock.</p><p>
“Overall, we’re looking at direct input cost increases of $30 to $50 per acre on corn and about $10 to $15 per acre on soybeans for 2008,” he said.</p><p>
He said he also expects fertilizer prices to be up by 35 percent over last year and costs to remain high next spring.</p><p>
“Fertilizer, seed, fuel and land costs are affecting farmer’s profitability and their crop decisions,” he said. “It will be critical for farmers to estimate their profit margins and manage their financial risks for 2008 crops.”</p><p>
In ISU extension agricultural economist Mike Duffy’s estimates, while seed and fertilizer were the major categories for increase, he said he wasn’t sure if he even increased the fertilizer estimate enough for 2008.</p><p>
“The seed costs are becoming more difficult to estimate, given the trait combinations that are being offered,” he said. “The demand for fertilizer, the changes in the industry and the higher energy costs are all driving factors.”</p><p>
Duffy added that while diesel and LP were hard to predict, they would also be higher this spring, relative to 2007. For Iowa’s neighboring states, he said there won’t be much difference in how other Midwestern farmers will adjust to the higher crop input costs for 2008.</p><p>
“I think that our costs are fairly similar, especially as it relates to the areas of increase,” he said. “Some states have a few more viable cropping alternatives, but with the price for corn and beans, it is doubtful people will stray too far.”</p><p>
Alan Miller, Purdue University farm business management specialist, said Purdue’s cost estimates for 2008 are rising more than would be indicated by higher input prices, as they reflect changes taking place in crop production practices in Indiana.
“In particular, Purdue’s cost estimates for 2008 reflect the recent rapid adoption of biotech corn seed by Indiana farmers,” he said. “These adjustments, as well as rising input prices, contributed to significantly higher estimates of the variable costs per acre for producing corn, soybeans and wheat in 2008, relative to 2007.”</p><p>
In Ohio, costs for corn production are expected to be 24-35 percent higher in 2008 than in 2007, depending on seed trait selection, while soybean costs are projected to be 23 percent higher – all thanks to the continuing trend of high fuel and nitrogen prices.
“The cost of some variables, like fuel, is not as staggering as one would expect,” said Barry Ward, an Ohio State University extension economist, “but one thing that we didn’t expect to see were dramatically higher potassium and phosphorus prices.”</p><p>