Most Minnesota, Dakota farmers set for 2022 input needs
Sisseton, South Dakota, farmers Gary Hanson and his son, Nick, talk about how their local co-op urged them to purchase fertilizer needs last November. A large cooperative based at Wheaton, Minnesota, says more farmers bought crop nutrients last year for the 2022 crop year.
SISSETON, South Dakota — Farmers and fertilizer suppliers seem to be in generally good situations for feeding the 2022 crop in northeast South Dakota and western Minnesota, despite a tripling in fertilizer costs, according to farmers and ag suppliers.
Gary Hanson, 72, and his son, Cody, 47, at Sisseton raise corn, soybeans and a little wheat on 2,500 acres. They bought their farm inputs — fertilizer and chemical — last fall.
Their local Border States Cooperative at Sisseton guaranteed 95% of their last year’s use, with a possibility of getting “all we want” as the season unfolds, Gary said.
“We kinda got on the ‘old price’ scale, and capitalized on the new pricing of the commodities, got high,” Gary said at the end of March 2022. “This year we’re set pretty well.”
Fertilizer was about $200 a ton higher than in 2021, but the seed increased about 10% from the previous year.
On top of that, the Hansons farm in the area of Roberts and Grant counties, which are the wettest two counties in the state. They got rain last fall, after a drought.
“The rain came just at the right time,” he said.
The Hansons rutted some of the fields but had good crops. This winter, their snow was 17 inches, ahead of averages.
Gary farmed with his father and a brother on a dairy, grain and cattle operation. Since the late 1980s, the family dropped the dairy but increased to 300 beef cows.
Cody joined the farm in 1995 after studying two years at South Dakota State University. The Hansons have 2,500 acres of grain farming.
On top of that, Gary spent 12 years in the state Legislature — a Democrat serving on the agriculture committees in both the House and the Senate through 2011. Ten years ago, he started selling farm real estate. (Local land values peaked in the area about five years ago at about $10,300 per acre. That’s backed off to $6,500 to $7,000 per acre.)
Cody said he was surprised at how fertilizer prices “spiked so high, so fast,” last fall. He said he’d never had to pre-pay for fertilizer before, and the concern about whether it would be available was the most persuasive.
“He told us if you don’t buy it this fall, you might not get it next spring. Kinda pushed into buying in the fall, I guess,” he said.
His farming friends say they bought most, if not all, of what they needed.
Some predicted price increases in fuel, but the Hansons didn’t purchase that in advance.
“I don’t know how high it’s going to go, and if it’s available for the following year. That’s kind of what I’m wondering about,” Cody said.
The Hansons’ pre-paid situation is not unusual, according to Philip Deal, general manager of the Wheaton-Dumont Cooperative Elevator, based in Wheaton, Minnesota.
His Wheaton-Dumont co-op deals with 1,200 farmer-patrons with 15 grain handling locations and five agronomy locations in the tri-state intersection. The co-op applies the fertilizer for 90% of its sales.
Kevin Grimes, Wheaton-Dumont’s agronomy division manager, said roughly 75% to 80% of the company’s farmers this year “pre-paid” for their 2022 fertilizer needs. That’s up from about 60% to 65% in previous years.
Deal and Grimes said the timing of pre-paid arrangements came in “waves” — first July 2021 and then in November-December. When farmers started those deals it was for typical reasons — often managing taxes. Initially, the prices for the fertilizer were 25% from the previous year’s price levels.
By October 2021, fertilizer prices had doubled.
By April 2022 they’d roughly tripled what they were for the 2021 crop.
Deal said the producers who pre-pay typically are the same ones year after year. The majority who buy very early typically purchase all of their expected needs.
“This time, it really, really paid off for them,” Deal said.
The 20% who didn’t pre-pay for fertilizer early tended to be the same ones who usually don’t. Deal said he’s seen only a few instances in his career where waiting to make fertilizer purchase in-season ended up costing the farmer less. Unlike some competitors, Wheaton-Dumont co-op didn’t limit farmers in their purchases.
On the way
Grimes said the co-op’s five fertilizer plants are full — including Dumont, Minnesota, at 10,000 tons, and New Effington, South Dakota, with 6,000 tons. They’ll be able to handle customers with only one refill of the inventory. Supplies for that refill are already en route on barge, rail and trucks.
“Next year is at greater risk,” Grimes said, noting increased global unrest.
Farmer counter-moves to the higher fertilizer prices are mixed — some are planting a little more corn, some are planting more soybeans which require less fertilizer.
The story on farm chemical purchases is similar.
About 50% of farmers paid for their herbicides early, up from about 30% in a more typical year. Some of this was because of heavy promotion by manufacturers in advertisements. Chemistry prices increased from last year roughly 30%.