Expect fuel prices, and thus ag inputs, to continue to rise, says Greg Ibendahl, Mississippi State University ag economist. With oil prices topping $53/barrel in mid October, Ibendahl and other analysts say the effect on diesel, gasoline and natural gas will be passed down the line. For crop inputs in 2004 and 2005, Ibendahl projects:

  • Fertilizer — Up 10% in 2004; up 4% in 2005.

  • Seed — Up 3% in 2004; up 6% in 2005.

  • Chemicals: No change in 2004; up 1% in 2005.

  • Repairs — Up 2% in 2004 and 2% in 2005.

  • Feed — Up 11% in 2004; down 8% in 2005 due to higher grain prices in the first half of 2004 and the lower prices that followed.

  • Machinery — Up 5% in 2004; up 8% in 2005, primarily because of increases in steel prices.

“I don't see how the manufacturers can help but pass those along in 2005,” Ibendahl says. “The bigger companies like GM and Ford and John Deere haven't been affected as much because of their negotiating power, but the smaller guys may get hurt.

“It all goes back to what's happening in China. Scrap metal prices are soaring because of the demand for steel in China. It's been estimated that 70% of the tall cranes used on construction sites are now located in China.”

  • Cash rent — Unchanged in 2004; up 2% in 2005.

  • Wages — Unchanged in 2004; up 4% in 2005.