On Aug. 28, the Thursday before Labor Day, the USDA released its updated forecast of what American farmers and ranchers will earn for laboring in their fields and pastures this year.
The new estimate was a whopper.
Net farm income in 2008 will be a record-shattering $95.7 billion, 10 percent higher than last year’s $86 billion and 57 percent greater than the 10-year average of $61 billion.
Even at this never-before-seen level, however, America’s early rising farmers and ranchers won’t get 2008’s biggest worm. That prize will go to the ag biz boys who raise input prices faster than the NFL raises ticket prices.
According to USDA’s Aug. 28 numbers, farm and ranch production expenses will hit a record $295 billion this year, up an incredible $40.4 billion, or 16 percent, in just 12 months.
Equally incredible, since 2002, input prices have climbed an over-the-moon 53 percent, or $101.7 billion.
The suppliers whose prices have climbed the fastest, notes USDA, include the usual suspects.
“Prices paid for seeds rose 12.3 percent in 2007 and are projected to increase 27 percent in 2008,” explains the Aug. 28 report. That’s an impossible-to-justify 40 percent price hike in less than two years.
But that’s not the half of it: “The price of wheat seeds jumped even more — spring wheat seed prices rose 244 percent from 2007,” the USDA report continues.
A 244 percent increase in one year? Think someone cut — bled — a fat hog when wheat futures exploded over $14 per bushel just before planting last year?
The fertilizer giants are even more brazen in putting their hands in your pocket.
“Average prices paid for fertilizer in 2008 through July are up 62 percent over 2007 and the prices paid in July 2008 were 104 percent higher than in July 2007,” offers USDA.
By comparison, it continues, the oil barons, rolling in dough themselves, were relative pikers: “In July 2008, prices paid for fuels and oils stood 62 percent higher than in July 2007” even though “prices paid for diesel fuel (since 2002) have risen 272 percent.”
Price increases of 27-, 62-, 104- and 244 percent do not occur in vacuum.
Somebody somewhere — in the futures markets, corporate boardroom, political cloakroom or, most likely, a combination of ’em all — did the legwork, then the math, to position these firms to clean people’s clocks when the good times struck.
These somebodies have names, titles and profit-sharing plans.
For example, James T. Prokopanko is president and CEO of Mosaic, Inc., the stepchild born of the 2004 marriage between fertilizer giants IMC Global and Cargill Crop Nutrition.
In fiscal 2008 (that ended May 31), Mosaic, the world’s largest phosphate and potash producer, netted $2.1 billion, or five times its 2007 profit of $420 million, while enjoying a 37 percent gross profit margin.
Prokopanko did even better; his 2007 salary of $2.9 million in cash, stock, stock options and other benefits soared 41 percent to $5 million in 2008.
Mosaic’s top five officers collectively garnered $14.3 million in 2008, 40 percent more than 2007’s $10.1 million total pay.
Some other somebodies might include Hugh Grant, chairman, CEO and president of Monsanto, the world’s biggest seed company. In 2007, Grant pocketed $10.9 million in salary and other compensation, 32 percent more than the previous year.
Another somebody is market leader Deere & Co.’s CEO, prez and chairman Robert Lane; he knocked down $14.3 million in total compensation last year.
Sure, these ag bulls are gettin’ while the gettin’s good. But price increases of 62-, 104- and 244 percent aren’t just good; they’re outrageous.
Outrageous enough for the Justice Department or Congress to at least question.