Source: POLITICO'S MORNING AGRICULTURE, 6/13/22

Despite high commodity prices, farmers are under immense strain from sky-high input prices, including fertilizer, seed and fuel.
Inflation bites: Joe Outlaw, the co-director of the Agriculture Food Policy Center at Texas A&M, recently told House Ag lawmakers that those high costs and inflation increase risk while cutting into profits.

Critical inputs like fertilizer were already reaching unprecedented costs before Russia invaded Ukraine in March. After the invasion, fertilizer costs soared even higher as Russia and its close ally Belarus are top producers of nitrogen and potash fertilizers.

Adjustments for 2023: Outlaw suggested changes be made to two USDA safety nets: the Price Loss Coverage and Agriculture Risk Incentive programs. Both programs, he said, need to have reference prices ratcheted up to adjust for inflation.

Rice, not nice: Outlaw noted concerns about rice producers, saying two-thirds of rice farms are poised to sustain losses in 2022.
Differing opinions: Joseph Janzen, an assistant professor at the University of Illinois, told lawmakers that corn, soybean and wheat farmers can expect higher profitability in 2022 relative to 2021.

Those commodities, he said, will fetch record prices for the remainder of 2022 and still elevated prices into 2023.
Inflation buoy: Inflation has not been all bad for farmers. Commodities have also reached record highs, allowing farmers to offset higher input costs.

Thompson, the top Republican on the House Ag Committee, expressed concern the equation may soon turn against farmers when commodity prices drop if inputs stay high.

Janzen said a resolution to the war in Ukraine could lead to lower prices on both sides, but said there is a “concern for U.S. agriculture” that additional compounding factors on the input side could persist beyond the war and create an imbalance.