Ag Pulse: The Challenge of Simultaneous Falling Commodity Prices and Increasing Input Costs

This post is a part of our Ag Pulse series. This series is a set of blogs posted about the results of research conducted by Ag Access amongst our 400,000+ member community of agricultural professionals and hobbyists. 

In today's rapidly evolving agricultural landscape, understanding the challenges that farmers face is crucial to ensuring the sustainability and success of the industry. At Ag Access, we've made it our mission to stay closely connected with the needs and concerns of the farming community and used this edition of the Ag Pulse to ask how our farmers are doing. 

The Top Challenges in Agriculture

We wanted to know the main challenges that our farmers are currently facing, and what they’re doing to combat them. The answers we received were quite illuminating - here are a couple of our highlights:

1. Falling Commodity Prices was the largest challenge for nearly half (49%) of the 411 surveyed farmers.
   1. This is no surprise as market fluctuations can have severe impact on profitability and as prices continue to fall, so will profits.  
   2. When asked how they see this continuing over time, 34% of farmers said they thought that Falling Commodity Prices would resolve themselves, and 38% said they thought that this problem would continue as it is. 
2. Increasing Input Costs was selected by 24% of farmers as their top challenge right now as prices for seeds, fertilizers, and machinery are increasing.  
   1. With lingering effects from massive inflation and supply chain disruptions, managing input costs has become a significant concern for many in the industry.
   2. Fifty five percent (55%) of farmers foresee issues with Increasing Input Costs getting worse over time. 
3. While not selected as a top concern for many (only 1% of farmers), 45% of farmers stated that Shifting to Sustainable Practices was their second most important challenge. 

Other challenges that were included, but selected at a much lower rate were: 

1. Changing Weather Conditions (8%)
2. Labor Shortages (6%)
3. Pests and Disease (3%)
4. Irrigation/Water Access Issues (3%)
5. Changing Insurance Prices/Coverage (2%)

How Farmers Are Addressing These Challenges

Our survey also delved into how farmers are responding to these challenges, particularly the two most significant ones: falling commodity prices and increasing input costs.

Addressing Falling Commodity Prices

• Limiting Costs (40%): Farmers are tightening their belts by reducing fertilizer usage, planting less, and only purchasing what is necessary. 
• Price Shopping (27%): When they cannot reduce purchases, or that is not enough, many are also turning to price shopping to get the best deals.
• Increasing Efficiency (10%): Some farmers are focusing on improving efficiency, especially in fuel consumption, to save costs.

Managing Increasing Input Costs

• Limiting Costs (31%): Similar to the strategies for falling commodity prices, farmers are cutting costs by holding off on costly investments, repairing equipment instead of replacing it, and planting less.
• Forward Selling (17%) and Marketing (16%): These strategies are helping farmers manage risks and secure better prices for their products.

What These Insights Mean for Your Business

Understanding the challenges that farmers face isn't just about empathy - it's about creating a successful business strategy. These results can be used to inform and direct strategy and marketing decisions. 

If you're a company that provides inputs, like seeds or fertilizer, now is the time to focus on value - not just price, but the overall return on investment that farmers get when they choose your products. Highlight why spending their money with you is smarter than going elsewhere, and how they will be getting more value out than they put in. 

For those in machinery sales and repair, lean away from sales and into the repair business. Highlight the ways you offer cost-effective solutions that align with farmers' current focus on limiting expenses. 

No matter your business, these insights and other market research can guide your strategy and decision making, helping you align your offerings with the real, evolving needs of your customers. These are just a few of the many ways this specific data can be used. 

Looking Ahead

The data from our survey reveals that while many challenges impact our farmers, none are harder than cost and pricing changes. But farmers are resourceful and adaptive. They're finding innovative ways to cut costs, increase efficiency, and manage risks. As the agricultural landscape continues to evolve, it's clear that the strategies farmers employ today will shape the future of the industry.

At Ag Access, we're committed to providing a voice for farmers by including them in market research to improve the products and services they use every day. By staying connected with our vast community, we aim to be at the forefront of the industry, helping companies navigate the complexities of modern agriculture and assist farmers in the ways that are truly needed.

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