The challenges facing them these days aren’t necessarily coming from their equipment or the land, it’s coming from their own government. It might even be a different government, for example, Ukraine. Right now, wheat prices per bushel in the US are sitting at $6.54, and each bushel is 60 lbs. There are roughly 36.74 bushels in a ton, which comes to $240.30 per ton of wheat. Each trailer load, which can be 36 tons, brings in roughly $8700.00 at current pricing. This, of course, fluctuates based on several factors, which we will get into here. Needless to say, though, it takes large quantities of wheat to feed the world.
What impacts the profit of a farming operation can vary. it could be climate-related. For example, a field here in the US, or on the other side of the world, didn’t get enough moisture. Here, we rely on the winter snow. The little we do get is just barely enough. Some years are better, and of course, some are worse on how it can affect crop yields. One more thing that can affect yield is pests and weeds. Some are indigenous, and some are imported from abroad.
Here is an interesting side note to illustrate that. The old Western movies and TV shows with tumbleweeds blowing across the screen is an interesting trope, but it has a historical origin. You see, in the early 1800’s, only 7,500 Russians immigrated to the United States, but starting with 1881, immigration rates exceeded 10,000 a year. Some of these Russian immigrants brought with them seeds. Contained within those seed bags was the Russian Thistle, aka, the tumbleweed. A particularly invasive and persistent species was also unknowingly imported into the US. Many of these immigrants settled in the great plains, which became the epicenter of the tumbleweed problem. A rather recent problem the Department of Agriculture has been fighting a war with, and losing, since their discovery in the 1870s in Bonhomme County, South Dakota.
But back to our regularly scheduled programming. Government import and export tariffs can also affect pricing. If a foreign government imposes tariffs, we may export less to them. This will cause an excess in how much is stored, driving down prices. Of course, this also happens in the reverse if we impose an import tariff against, say, China. Interestingly, here in the US, we import wheat primarily from Canada. Other sources include Italy, India, Mexico, South Korea, and, yes, Ukraine. Why would the US import wheat when we grow it as well as export it? Believe it or not, there is another economic factor here. Transporting wheat by rail from, say, Colorado or even Kansas to, let’s say, Pennsylvania can be more expensive than shipping it across the Atlantic from Europe.
But beyond that, we could also be importing that crop from another country in order to keep up with demand. That might be because of a draught causing regional yield losses. It might also be to keep prices steady or low. As mentioned previously, we import wheat from Ukraine. One of the world’s largest exporters of wheat. They send it to countries that cannot grow it and even some that do. Egypt, for example, which cannot grow wheat, imported $430M worth. Another is Lebanon, which imported $247M. Ukrainian wheat exports are challenging, of course, given the current conflict with Russia and their blockades of shipping in the Black Sea. If Ukraine cannot deliver, Egypt and Lebanon will have to shop elsewhere with friendly countries that can offer the best pricing. So, global markets affected by regional conflicts can also have an economic impact on how much the family farmer can bring in.
The next thing on the list that can impact farmers is fuel prices. There is little difference between off-road diesel and on-road diesel. The difference between them is that off-road diesel isn’t taxed as heavily, and it's dyed red for enforcement reasons. That’s it. But that does not change the fact that fluctuating prices can and do impact them. In September 2020, off-road diesel price was at $2.41 per gallon. In June of 2022, the price went as high as $5.75. As of May 2024, it’s sitting at $3.84. These fluctuations impact the income of the farmers in rural America.
Fuel regulations and federal and state fuel taxes are not the only things nowadays. With federal climate requirements placed on diesel engines, vehicles, and tractor manufacturers alike, farmers are now having to purchase DEF or diesel exhaust fluid. Which is just a fancy label for urea and deionized water. In 2021, the pricing per ton for urea was $295. However, pricing increased in 2022 by 171% to $800 per ton due to supply chain and manufacturing issues. As of May 2024, that price has gone down to $585 per ton.
The urea used is synthetically derived from ammonia and carbon dioxide. Urea plants are closely placed next to sites that produce ammonia, such as coal and natural gas refineries, to capture their hydrocarbons. Therefore, manufactured urea pricing can be closely tied to the regulation and economics of coal and natural gas. It’s just another dig in the farmer’s pocket. Needless to say, I won’t be going into the environmental impacts of synthetic urea manufacturing for DEF. But it is also classified as a greenhouse gas. Go figure.
There are other global markets that can affect the farmer. Iron and steel prices. Mostly an imported product, this can affect the price of new tractors, implements, and parts. For example, knife sections of a cutting bar mounted to a header are constantly needing to be replaced during harvest. This is because they either become dull or break as they cut the stalks of wheat. But in addition to the costs of the knives, there is the inconvenience of where and when those parts are available.
Our next impact on farmers is not even related to farming at all. Living in remote areas such as Eastern Colorado, Western Kansas, and many other rural areas, healthcare can be another factor. In 2010, when the Affordable Care Act was passed, many farmers were forced into purchasing health insurance when most were paying in cash. It was either getting health insurance or being taxed for not having it. You see, some family farms are run as self-employed entities, and some are run as a company. But even the family farm run as a company was impacted by adding this new requirement.
But one thing that did come about from that impact was the formation of not-for-profit healthcare cooperatives. This allowed the farmer to obtain inexpensive yet corporate levels of insurance. The more that joined, the better. That is if they had the providers available to them. Local hospitals, or even the family physician's office where you get regular checkups, are slowly becoming a rare thing. Mainly because those doctors and nurses get more money in the big cities. Besides, why would anyone want to live in the middle of nowhere where inconveniences are just the norm and entertainment is sparse? Which is another impact in flyover country. The inconveniences of living in rural areas can be challenging. For example, say that a farmer has a home improvement project and needs supplies. While there can be lumber stores nearby that carry a faucet or 2, there isn’t a huge selection like you would get at one of the larger home improvement stores. The nearest one to me is 2 ½ hours away. Hopefully, you didn’t forget anything and need to run back. Want to catch the latest movie you’ve been wanting to see? The only theater near me has 2 screens and isn’t any larger than, say, your local shoe store. So, movies don’t last long. They may not even get the movie you’ve been wanting to see. But all of this is dependent on the farmers having time to see a movie.
Farmers spend most of their time either working on equipment or out in the field. When it’s harvest time, they have to get the crop in as quickly as possible. There is no celebrating the Fourth of July, attending the funeral of a dear friend, or the birth of a grandkid. Leaving the field when they should be harvesting will ultimately cause another impact.
While there are many other issues that can impact the local farmer, and some of these can even be translated to other industries, they ultimately end up hurting the consumer. Because fuel, steel, healthcare, and now urea prices translate to a loaf of bread costing $1.28 as recently as 2018. But that same loaf has now ballooned to $3.29 as of now. One thing is for certain: rural America is being impacted. While most here don’t discuss their politics, I can say that every one of them is paying very close attention to every county, state and national candidate coming up for election. Because elections can have an impact, too.
