1. How Will Farmers Respond to High Fuel and Fertilizer Prices? Damona Doye Regents Professor and Extension Economist Oklahoma State University

3. Value of production by commodity Source: Oklahoma Ag Statistics 2004 Bulletin

4. Average per farm for selected expenses Source: 2002 Census of Agriculture for Oklahoma

5. Oklahoma farmland use Source: 2004 Ag Statistics (acreage planted for crops, acres harvested for hay)

6. Oklahoma cropland use Source: 2004 Ag Statistics (acreage planted for crops, acres harvested for hay)

7. Average operating costs for wheat in Prairie Gateway USDA Economic Research Service, 2002

8. Impact of Higher Petroleum Costs on an Example OK Wheat Farm $1.80/gal Anhydrous @ $368/ton $2.80/gal Anhydrous @ $442/ton Conv.Lo-tillNo-tillConv.Lo-tillNo-till Fuel ($/a)16.4311.537.7925.5517.9412.12 Fertilizer ($/a)20.3720.8827.5524.4625.0733.08 Subtotal ($/a)36.8032.4135.3450.0143.0145.20 Increase ($/a)13.2110.609.86 % change in total operating costs 16.4%16.3%10.7% Source: OSU enterprise budget software

9. Impact of Higher Petroleum Costs on OK Wheat Farms Approximately $5/a increase in fuel costs per $0.50 increase in diesel fuel Approximately $2/a increase in fertilizer costs per 10% increase in costs Who is hurt most?  Producers in low yield areas  With high fuel prices, conventional tillage operations more than low- and no-till operations  Tenants with cash leases

10. Impact of Increases in Petroleum Costs on OK Crops ($ increase per acre compared to last year) Fuel Fertilizer $2.30/gal 110% $2.80/gal 120% $3/gal 135% Wheat, dual purpose 81721 Canola71421 Grain sorghum71317 Cotton81721 Corn silage102028 Soybean245 Peanuts81519 Bermuda pasture 4.51017 Bermuda hay182533

11. Number of farms by value of sales Source: 2002 Census of Agriculture for Oklahoma

12. What have farmers done? Anecdotal evidence Put on less fertilizer this fall  Maybe more soil testing  More selective use More productive land Higher response pastures May put on more fertilizer in spring Eastern OK: more interest in poultry litter Bit the bullet and fertilized as usual More shopping around for fertilizer? On-line buying? Contracting? No rain, no need for fertilizer

13. What have farmers done? Anecdotal evidence Less wheat  Soybeans  Canola  Cowpeas  Questions about winter peas  Other alternative crops Alternative tillage systems  Minimum till  No-till Legume rotation

14. What have farmers done? Anecdotal evidence Shop for custom operators Complain about trucking costs Higher cash rents for small grain pasture Still running cattle regardless of fuel prices Will have fewer cattle in spring? Shift from farming to grass Pecan producers raising prices

15. What happens if farmers don’t topdress wheat in spring? Positive effectsNegative effects Decreased costsIncreased costs Fertilizer: 30 # UAN @ $300/ton Application: $3 $4.50 $3.00 Increased returnsReduced returns 5 bu x $3.25/bu$16.25 Total$7.50Total$16.25 Difference$(8.75)

16. Break even price of N? P N x 2 lb N/bu = P W /bu P N = P W /bu =$3.25 2 lb N/bu 2 P N = $1.625/lb = $3,250/ton

17. Bermuda grass pasture No fertilizer50# N100# N Fertilizer017.6535.3 Pesticide3.36 Custom hire3.706.70 Repairs1.87 Other1.201.702.13 Fixed costs49.61 Total costs ($/a) 47.7568.9086.98 Expected yield1 ton/a2 ton/a3 ton/a Cost per ton$47.75$34.45$28.99

18. Tools and assistance available to producers AgMach$, ag field machinery cost estimation software  http://www.dasnr.okstate.edu/agmach/index.html http://www.dasnr.okstate.edu/agmach/index.html  Or Tennessee machinery cost calculator at http://economics.ag.utk.edu/mcc.html OSU enterprise budget software  agecon.okstate.edu/budgets OSU IFMAPS program to assist farmers/ranchers with business planning  agecon.okstate.edu/ifmaps Oklahoma Ag Linked Deposit Program (OALDP) to help lower interest rates for producers  http://www.state.ok.us/~sto/rblink.html Custom rate survey currently being conducted (OSU CR-205) Noble Foundation custom rate operator searchable database  www.noble.org/WebApps/WebListings/CustomHire/Index.aspx www.noble.org/WebApps/WebListings/CustomHire/Index.aspx

19. agecon.okstate.edu/budgets

20. Free and confidential assistance in business planning for Oklahoma producers  Producer initiates contact with IFMAPS  Case is assigned to local IFMAPS specialist  IFMAPS specialist calls producer  Producer gathers and summarizes farm records  Specialist and producer arrange a mutually convenient time to meet  Specialist prepares budgets and financial statements  Specialist and producer meet to review business plan 1-800-522-3755

21. www.noble.org/WebApps/WebListings/CustomHire/Index.aspx

22. Drought monitor

23. What will farmers do in spring? Depends on  What they did this fall  Weather  Fuel, fertilizer prices  Grain market outlook  Cattle market outlook