As costs rise, farmers dig up efficiencies
Jan. 23—From fertilizer to fuel; packaging to pest control, Robert Black, co-owner of Catoctin Mountain Orchard, couldn't tell you which costs of operating his farm didn't increase in 2022.
"I mean it's really the whole gamut of almost everything we do. I don't know anything that's gone down," Black said.
Black is one of many Frederick County farmers that were impacted by the rising production expenses for U.S. farms last year, which the U.S. Department of Agriculture forecasts to be the largest year-to-year increase since 2014.
Adjusted for inflation, expenses for U.S. farms rose from $395.4 billion in 2021 to a projected $442.0 billion in 2022 — an 11.8% increase, according to a December 2022 report from the USDA's Economic Research Service.
The report identifies fuel and fertilizer costs as the categories with the highest percentage increase, which can hit Black and his co-owners in tandem when they have fertilizer shipped to their farm.
"Our chemical costs have gone up and it's not just the cost, it's the freight to ship things," as well, Black said.
Adding to the financial difficulties of ordering fertilizer are the logistics of planning for deliveries of all goods.
Black said whereas he was once able to call a retailer and have supplies delivered a week later, now he has to plan well in advance to ensure that his order can be completed in a timely manner, accounting for potential kinks and delays in the supply chain.
This is also the experience for Tony Brusco, CEO of South Mountain Creamery in Middletown Valley, whose dairy cows and chickens rely on the grain the farm grows through bulky orders of seed and fertilizer.
Brusco said his farm used to place orders for these goods in the wintertime or early spring in preparation for planting a few months later. Now, Brusco said, his farm puts in orders during the fall the year before.
These measures ensure that South Mountain Creamery has the products they need when it comes time to plant and help lock in volatile prices for fertilizer and seed before they rise later on.
"We have a large dairy farm here and we have a lot of mouths to feed, so we've got to make sure we're growing enough food to feed everybody," Brusco said.
One reason for the rising cost of fertilizer is tied to a crucial ingredient in its production: natural gas. The supply of which, according to Mark Townsend, agricultural agent at Frederick County's University of Maryland Agricultural Extension office, is tied to a conflict abroad.
"A lot of those processes [to make fertilizer] require a significant amount of" natural gas, Townsend said. "And many of these factories and production facilities are located overseas; in Ukraine, Russia or Eastern Europe, where it's quite a difficult task getting a lot of these products over " to the United States.
Also on the rise are labor costs, which are further complicated by a shrinking labor pool, according to Brusco.
Because of these heightened expenditures some farmers have to shift part of their costs to consumers.
"We have to pay bills, we eat food and buy gas, we pay taxes. We're like everyone else," Black said. "I hate raising prices. We try to raise them accordingly as we are getting these costs passed on to us, because if you do not, you will be out of business in no time."
There are practices that Black and Brusco have adopted to help avoid this measure, however.
For Brusco and South Mountain Creamery, it's a combination of many little things; streamlining delivery routes for their dairy products, upgrading in equipment and expanding reach to grocery stores.
In order to cut down on fertilizer, Brusco said they use cover crops; a process where farmers plant crops like rye between growing seasons that they don't intend to harvest. As those crops grow, their roots pull up nutrients from the soil and mitigate erosion. Then, when the crops die or go dormant in the winter, their remnants can be mixed into the soil and increase its organic matter.
"We go through that process for both soil health and for environmental reasons, as well as for crop production," Brusco said. "So it's a it's kind of a balancing act between all of those things."
At Catoctin Mountain Orchard, Black invested in a spading machine that he'll use to incorporate compost from his farm back into the soil, similarly decreasing reliance on chemical fertilizer.
When it comes to pests, Black opts for biological controls — releasing a slender insect predator called green lacewing, which eat stink bugs that feed on his crops. Doing so reduces the need for pesticides, which are also tied to rising chemical costs.
It is a culmination of these efforts, according to Townsend, that will shield farmers from the fluctuations of the market.
"A lot of these [costs] are not going to be solved overnight," Townsend said. "It's definitely going to be an iterative battle year after year to reduce your fertilizer input and maintain profitability."