By PATTY RAMUS
News Staff Writer
Farming has always been a tough business and Cliff Tollini has been no stranger to this truth.
Tollini owns a beef cattle, cash crop and cow calf operation in Allis Township near Onaway. He farms 1,300 acres and has seen many of his input costs increase in recent years. Items including fertilizer, herbicide and seed corn costs have all gone up.
"Oh my gosh has it gone up," he said of his input costs.
According to the "Farm Production Expenditures 2007 Summary" produced by the U.S. Department of Agriculture's National Agricultural Statistics Service, U.S. farm production expenditures totaled $260 billion in 2007, up 9.3 percent from the revised 2006 total of $238 billion.
The largest percentage contributors to the increase were fertilizer and lime and soil conditioners, up 26 percent; fuels up 14 percent; agricultural chemicals up 11 percent and tractors and self propelled equipment up 11 percent. For the first year ever, the trend for all expense items was higher than the previous year except for miscellaneous capital expenses.
According to the 2002 Agricultural Census, each reporting farm in Michigan spent an average of $62,551 on farm production expenses in 2002 and an average of $55,610 in 1997.
Fertilizer has seen a large increase in its prices. Nitrogen prices have probably more than doubled what they were a few years ago, said Steph Harsh, professor of agriculture food and resource economics at Michigan State University.
"It relates to the energy situation. We have to use natural gas as a source to get our nitrogen. I think we've got a reduction in capacity in meeting the needs and industry capacity," he said.
Other areas including equipment, land rent and health insurance have also seen price increases .Dairy and beef farmers have seen their feed and protein supplement prices go up.
"Some families have opted not to buy health insurance simply because they can't afford it," Harsh said.
Tollini said he's had to start paying more for the generic version of Round Up. This year he paid $40 a gallon whereas last year he paid $14.50 a gallon. In 2006 he paid $10.50 per gallon. For corn seed he paid $160 per bag this year, about $100 per bag in 2007 and he's heard that prices will be about $300 per bag in 2009.
The recent drop in fuel prices has been a blessing to some, but it won't be for farmers if their commodity prices aren't high enough to make up for the input costs.
"The fuel has come down but you know all that crop in 2008, we planted it with $4.50 fuel," Tollini said. "I figure our break even for corn is $4 (a bushel). We're below break even right now."
A.J. MacArthur of Lachine owns a cash crop farm in Lachine, where his crops consist of fruit including strawberries and raspberries along with sweet corn, pumpkins, squash and soybeans. He figures it cost him between $200-$215 an acre this year to plant soybeans.
"On the fruits and vegetables we broke even on those. The soybeans, I'm still waiting on but right now it's not looking good," he said. "If I had to sell them today, I would lose money on them. I'm kind of hoping it kind of goes up a few pennies any way."
MacArthur's costs have also increased in areas including fertilizer, fuel and some types of seed. This year he saw extensive deer damage, adding to his costs. Labor is another area where he incurs a lot of production expense.
"People need to realize that it may look like you're bringing in lots of money or if they started figuring out just the value of the crops, they could think there's lots of money there. But input costs and time take a huge percentage of that away," he said. "People just get the wrong idea real fast. They don't realize the amount of hours that you have to put on on this job."
MacArthur has tried to cut his costs where he can and one of the largest ways to save money is by not taking a pay check. He has also saved by buying liquid fertilizer as opposed to bagged and practicing no tilling for some of his crops, he said.
No tilling has been the largest way Tollini has saved money for his farming operation. He has practiced no tilling since the early 1990s and figures it's cut his fuel bill by 50 percent each year, he said.
Tollini said he pays attention to his soil tests as another way to decrease spending. The soil tests help reduce the likelihood that too much fertilizer will be applied. Other small items including checking and the air pressure in tractor tires and keeping the route time with the tractor on roads are ways he's managed to pinch the pennies.
Patty Ramus can be reached via e-mail at pramus@thealpenanews.com or by phone at 358-5687.