These items were expected to push overall costs up 1.3pc in 2017, which would mark the first year since 2014 that farmers have failed to reduce total costs.
Farmers cut $40.20 billion to bring total costs down to $350.49 billion between 2014 and 2016, according to the US Agriculture Department’s Economic Research Service.
The downturn in spending has hurt farm equipment manufacturers.
Sales in the agriculture division at Deere & Co (DE.N) and CNH Industrial (CNHI.MI) fell sharply during 2015 and 2016. Deere expects farm equipment sales in the US and Canada to be down another 5pc this year, and CNH said in July that sales in North America were down.
Crop Prices & Yields
Falls in crop prices have outpaced the cuts farmers have made in spending.
Corn futures Cv1 have dropped about 12pc during 2017 from 2014 averages while soybean prices Sv1 are 17pc lower and wheat Wv1 has tumbled 24pc.
Farmers are looking for bigger yields through better seed and pesticide technology to improve their ability to compete with their counterparts in Latin America and elsewhere. But they are struggling to afford the expensive latest varieties as they tighten their belts.
Hardier seed breeds and rising yields have for years boosted US farm productivity. But they have also contributed to the massive oversupply in global grains markets.
Saving money on capital purchases is one thing. But cuts to farm inputs – from reducing how many seeds are planted to cutting back on fertilizer use – will eventually hurt productivity, say farmers.
“You find yourself in a Catch-22,” said Jeff Fisher, who grows corn and soybeans on 1,600 acres in Illinois.
“You just hope the yield won’t be hit too bad next year.”
David Miller, who grows corn and soybeans on 500 acres in southern Iowa, saved about $8 per acre for beans and some $20 per acre for corn by using cheaper seeds.
The risk is that they will produce a smaller harvest. Adding to that concern: After a dry summer, he expects his poorest soybean field to yield around 20 bushels per acre, 65pc off the state average.
Even with the cuts, US farmers are still spending more per acre than their competitors in Latin America.
In Argentina, corn was expected to cost just under $200 per acre in the 2017/2018 season, according to Ezequiel de Freijo, analyst at farm association Sociedad Rural’s Institute of Economic Studies, well below the around $310 per acre in the US in 2016.
Soy farmers in the Latin American country are spending around $115 an acre, compared to around $163 in the United States during 2016
The lower costs have helped Latin American producers take market share from their competitors in the United States. Brazil and Argentina combined are expected to capture nearly 42pc of the global corn export market in the 2017/2018 crop year, up from under 38pc in 2014/2015.
During the same period, the United States saw its share of global corn exports drop to around 31pc of the market from 33.5pc.
Latin American farmers, like their counterparts in the north, are also searching for ways to cut costs to boost their margins and take more of the global market from competitors.
“We are cutting use of fertilisers, for example,” said José Fernandes, who farms 400 hectares, or nearly 1,000 acres, of soy in Brazil’s key Mato Grosso production region.
“We have been ‘burning fat’ for a long time here on costs.”
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