Inflation hits McHenry County farmers who try to cut costs

Producers consider passing cost to buyers and hope for higher commodity prices

Farmer Bryon Kelly fills up his tractor with diesel fuel Friday, June 10, 2022, as Destiny West controls the pump on the fuel storage tank. The two were baling hay on their farm near Richmond. The rising cost of nitrate and fuels is raising the farmers' operational costs.

Brandon Walter chose to forgo putting fertilizer on some of his fields this spring after seeing his costs double and triple compared with previous years.

The Harvard area farmer is one example of McHenry County farmers trying to cut expenses this growing season. They must balance how inflation is hitting their bottom line while pricing at a point consumers will bear.

Specialty producers in McHenry County – farmers growing produce for local sale – also are taking a hard look at their costs versus what they can charge for product, said Raghela Scavuzzo at the Illinois Specialty Growers Association.

“All farms are seeing an increase in input costs,” Scavuzzo said. “Whether speciality, commodity or dairy farms, … across the board, they are seeing an increase in that cost.”

Inputs include the seed and fertilizer producers need to start a crop as well as the fuel and labor needed to get that product both into and out of the ground. All farmers in the region are seeing inflationary increases in what they pay for those inputs, officials said.

Farmer Bryon Kelly cleans his baler Friday, June 10, 2022, after baling hay on his farm near Richmond. The rising cost of nitrate and fuels is raising farmers' operational costs.

Nitrogen to fertilize fields increased fourfold for some producers, according to farmers around the county. Like suburban residents feeling the pinch at the gas pump, farmers also are seeing their fuel costs skyrocket. And, like many employers searching for workers, they also struggle to find people willing to plant or harvest those fields.

Another pressure on local growers was a wet spring. Rain across the Midwest made for tough planting conditions, with many fields too muddy or flooded to get equipment in. Federal crop insurance has final planting dates. After those dates, farm insurance will not pay for a failed field. Farmers balanced that risk and some left acreage unplanted this season.

Dan Ziller, who farms and has a milking operation outside Huntley, said some of his fields were not fully planted this year because it was just too wet.

Hot days in May helped get seed started here, and planting conditions were not as bad as some northern Plains and Western states, said Trent Ford, a climatologist with the Illinois State Water Survey.

“Not as bad, but that that doesn’t mean there are not folks who are not significantly delayed” for their 2022 planting season, Ford said

To offset high input costs and fallow fields, farmers are hoping for high yields with high commodity prices.

According to the U.S. Department of Agriculture, commodity farmers are expecting an average of $6.75 for a bushel of corn and prices for wheat could hit $10.75 a bushel.

“If we can maintain the current price, if we can get a decent crop, we should be able to make it,” Walter said. He is one of the larger operations in the county, running between 1,000 acres and 2,000 acres each year.

A majority of farms here are small, said Dan Volkers at the McHenry County Farm Bureau. The U.S. Department of Agriculture’s 2017 Farm Census counted 881 farms in the county, averaging 236 acres.

Destiny West checks how much diesel fuel is left in the storage tank Friday, June 10, 2022, at a farm near Richmond. The rising cost of nitrate and fuels is raising farmers' operational costs.

Delaying when he sprayed fields with fertilizer or skipping some altogether was one way he could cut down on his costs, Walter said.

“If soils are built up enough, you can cut back. If you cut back too much, it will decrease your yield,” Walter said.

He also tries to be careful when running equipment between fields to reduce fuel costs. His are within about 10 miles of each other, but he knows operators with fields more than an hour apart.

Ziller, of Huntley, raises soybeans, corn and alfalfa hay. About 25% of what is raised goes back into feeding and caring for the milking herd. He also saw his nitrate fertilizer go from $300 a ton to $1,600 a ton. Diesel fuel to run their equipment is more than $5 a gallon. He said he has had problems finding extra help for the milking operations or field work.

As commodity farmers expect higher prices to offset some of the input costs, specialty farmers must consider raising their prices for the same reasons. These farmers often sell their product directly through subscription boxes, at farmers markets, to stores and restaurants, or at farm stands, Scavuzzo said.

These producers often have short seasons in which to sell their products as they ripen, she said. Products must be harvested by hand and labor costs are up, she said.

Farm fresh produce already is priced higher than at grocery stores in many instances and higher prices could scare off customers, she added.

“There is a lot of fear with inflation. If I raise my prices because of fuel, labor, packaging costs, will people pay that price?” Scavuzzo said.

Farmer Bryon Kelly brings his tracker and baler to his fuel storage tank to fill up the tractor with diesel fuel Friday, June 10, 2022, after baling hay on his farm near Richmond. The rising cost of nitrate and fuels is raising farmers' operational costs.

Farm producers and the agencies that work with and for them also worry about food access and ensuring that no one goes hungry due to high food costs, she said.

“There is the question of accessibility and affordability, that the farm can remain profitable while still making sure there is access,” Scavuzzo said.

What McHenry County specialty growers have going for them is an urban population “looking to connect with agriculture” by buying locally grown product in season, Scavuzzo said.

Producers are not getting rich off of the current inflation, she said. For what consumers pay in stores, farmers see about 15 cents for every $1 spent, she said.

That can go higher for producers selling directly to customers – up to 75 cents on the dollar. They also have additional costs, including packaging and marketing their products for local sale, Scavuzzo said, so while they make more on products, their costs are higher, too.

What consumers might find this season is less variety in their foods as producers attempt to keep costs in check. “You can’t necessarily have 15 flavors” of one product any more because of inflation and supply chain demands, Scavuzzo said.

“The takeaway is: What you are seeing at the store is nuanced, and no one is getting rich off of this” at the local farm level, she said. “We know what they are feeling at the store, but at the end of the day no one is taking more home.”