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PURDUE ECONOMIST COMPARES RISE IN AG INPUT COSTS WITH GENERAL INFLATION
Nov. 13, 2023
by Michael Langemeier, Ag Economist, Purdue University
Table 1 presents the average price changes for inflation and farm inputs for 2022, for the 2018 to 2022 period, and for the 2013 to 2022 period. The first thing that becomes immediately apparent is how much higher inflation was in 2022 compared to the 5-year and 10-year averages. The 10-year average inflation rate was only 2.1 percent.
Now let's compare the rate of general inflation to annual farm input price changes. For the annual change from 2021 to 2022 (labeled 2022 in table 1), the input price changes for all of the farm inputs except for machinery were higher than the annual change in the implicit price deflator.
Annual price changes for energy and fertilizer were particularly large. The annual price change for diesel was 63 percent. The annual price changes for fertilizer ranged from 36 percent for diammonium phosphate to 79 percent for anhydrous ammonia. Turning to the 10-year averages, the only farm input with a price change smaller than or equal to the rate of change for the implicit price deflator was feed. The 10-year input price increases for diesel, potash, phosphate, and anhydrous ammonia exceeded 5 percent.
The results in table 1 illustrate how much of an outlier the price changes in 2022 were compared to the long-run averages.
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