Market Forces at Play in Producing the 2012 Crop

Alan MillerCraig Dobbins

Bruce Erickson

Purdue University is an Equal Opportunity/Equal Access institution.

Major Inputs for Crops

• Fertilizers• Seeds• Pesticides• Fuel (machinery operation, crop drying)• Machinery• Labor

2

From Roller Coaster to Merry Go Round, Inputs Costs Rising

3

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

4070

560

110

160

210

260

310

360

410

Farm Prices Paid Indices - Seeds, Fertilizers, Chemicals, and Fuels

Seeds Fertilizers Chemicals Fuels

Year

1990

-92

= 1

00

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

4070

5100

150

200

250

Farm Prices Paid Indices - Machinery Price and Wage Rate

Machinery Wage Rates

Year

19

90

- 9

2 =

10

0

2012 Outlook 6

Fertilizer Use By Region, 2010

Fertecon

2012 Outlook 7

Potash Corp

2012 Outlook 8

Nitrogen Fertilizer Plant in Trinidad

Courtesy PCS Sales

11

2012 Outlook 14

Phosphorus Mining in Florida

http://www.nytimes.com/2007/08/04/us/04phosphates.html and http://upload.wikimedia.org/wikipedia/commons/e/ef/Togo_phosphates_mining.jpg

2012 Outlook 17

Mining Potassium Deposits in Canada

Nitrogen/Corn Price Ratios from Purdue Budgets

YearN Price

$/lbCorn Price

$/buRatio

N price/Corn price

2005 .26 2.12 .122006 .34 2.31 .152007 .28 3.71 .072008 .46 5.00 .092009 .49 4.00 .122010 .30 4.20 .072011 .49 5.54 .09

2012 Est .54 5.90 .09

23

What is New in Seeds/Genetics• New genetics/traits drive pricing• Refuge in a bag• Technology fees are dominating factor• Tough conditions for seed production in

some areas

Indiana Seed Price Trends

24

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

E

10

30

50

70

90

110

130

150

170

190

210

230

250

270

290

310

330

350

Biotech Corn Biotech Soybean

Year

Do

llars

Pe

r B

u. O

f S

oy

be

an

or

Pe

r 8

0,0

00

Ke

rne

ls o

f C

orn

Corn Seed Cost/Gross Revenuefrom Purdue Budgets

YearSeed Corn

Cost $/A

Corn Gross Revenue

$/ARatio

Seed Cost/Revenue2005 34 303 .112006 35 340 .102007 43 581 .072008 79 785 .102009 89 632 .142010 94 668 .142011 99 892 .11

2012 Est 118 950 .12

Soybean Seed Cost/Gross Revenuefrom Purdue Budgets

YearSeed Soybean

Cost $/A

Soybean Gross Revenue

$/ARatio

Cost/Revenue2005 36 241 .152006 37 270 .142007 39 375 .102008 48 608 .082009 52 426 .122010 52 470 .112011 59 643 .09

2012 Est 73 608 .12

2012 Outlook 27

2007 2008 2009 2010 2011

Glyphosate (Roundup) Herbicide $29 $40 $43 $23 $17

Sethoxydim (Poast) Herbicide $74 $73 $83 $81 $83

2,4-D Herbicide $16 $17 $19 $18 $18

Terbufos (Counter) Insecticide (lb) $2.32 $2.53 $2.46 $2.64 $2.73

Chlorothalonil (Bravo) Insecticide $47 $48 $60 $50 $41

Price Trends of Individual Pesticides (price per gal unless noted)

NASS Agricultural Prices, http://usda.mannlib.cornell.edu/usda/nass/AgriPric//2010s/2011/AgriPric-04-29-2011.pdff

2012 Outlook 28

Sprayer Nozzle and Boom Control

2012 Outlook 29

Planter Clutches

http://www.trucount.com/Photo-Gallery.aspx

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

4070

5100

150

200

250

Farm Prices Paid Indices - Machinery Price and Wage Rate

Machinery Wage Rates

Year

19

90

- 9

2 =

10

0

31