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Farm Business
Agricultural Matters
Will Very High Input Costs, Cause A Drop In Production?
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<blockquote data-quote="Tarw Coch" data-source="post: 8039961" data-attributes="member: 1008"><p>Yes it will cause a drop in production but as agriculture is a long term buisness it won’t show up quickly. </p><p>Some farmers are relatively well stocked with fertiliser at prices that looked good a month ago let alone today so with rising ex farm prices they should be on for a relatively good 12 months before all the higher prices catch up with them.</p><p>Plenty of others, myself included have taken cover on some of our fertiliser requirements at what were until recently unpresidented highs , whilst others, probably a relatively small minority haven’t bought at all. This is bound to lead to some drop in production although in my case hopefully not too great with a good carry over of forage from last summer.</p><p></p><p>So for this year any drop in production is likely to be relatively small, but next year when we are all likely to be facing higher input prices there is the probability of a much larger drop in production. A lot will hinge on farm output prices, will they rise enough to cover the increased input costs and if they do how long will they last, as I said earlier, farming is a relatively long term buisness, inputs can need to be bought many months/a year or so before product is sold, if ex farm prices should drop in the meantime that could easily result in a loss. This makes farming with high input prices risky, those who are risk averse will likely be cautious/reluctant to but fertiliser at high prices for next year, I suspect there will be bigger drops in production next year but who knows what will happen in the meantime.</p><p></p><p>One things for sure, I can’t see the current situation leading to rises in production.</p></blockquote><p></p>
[QUOTE="Tarw Coch, post: 8039961, member: 1008"] Yes it will cause a drop in production but as agriculture is a long term buisness it won’t show up quickly. Some farmers are relatively well stocked with fertiliser at prices that looked good a month ago let alone today so with rising ex farm prices they should be on for a relatively good 12 months before all the higher prices catch up with them. Plenty of others, myself included have taken cover on some of our fertiliser requirements at what were until recently unpresidented highs , whilst others, probably a relatively small minority haven’t bought at all. This is bound to lead to some drop in production although in my case hopefully not too great with a good carry over of forage from last summer. So for this year any drop in production is likely to be relatively small, but next year when we are all likely to be facing higher input prices there is the probability of a much larger drop in production. A lot will hinge on farm output prices, will they rise enough to cover the increased input costs and if they do how long will they last, as I said earlier, farming is a relatively long term buisness, inputs can need to be bought many months/a year or so before product is sold, if ex farm prices should drop in the meantime that could easily result in a loss. This makes farming with high input prices risky, those who are risk averse will likely be cautious/reluctant to but fertiliser at high prices for next year, I suspect there will be bigger drops in production next year but who knows what will happen in the meantime. One things for sure, I can’t see the current situation leading to rises in production. [/QUOTE]
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Will Very High Input Costs, Cause A Drop In Production?
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