Fuel down, but other inputs up

06/05/2009 11:07:50 AM
Andy Nelson

Cheaper gas has come as welcome relief to Ohio vegetable growers, but other input burdens loom large.

Lower fuel costs have a trickle-down effect that suits Mark Guess, president of GroCo Farms Inc., Jamestown, Ohio, just fine.

“Energy costs are down about 50% from last year, which relates to herbicides and fertilizers,” he said. “And we’ve started getting quotes on packaging, and that looks cheaper.”

On the packaging side, a decision GroCo made in the recent past is now paying dividends, Guess said.

“We went to a recyclable cardboard container several years ago, which has helped us because the cost of waxed product is high,” he said.

Seed costs this year are similar to 2008 prices, Guess said.

With the exception of container costs, most input costs continue to rise, said Jim Wiers, president of Wiers Farm Inc./Dutch Maid, Willard, Ohio.

Some inputs are deceptive, he said. For instance, fertilizer costs are lower than a year ago but are still toward the top of a three-year price curve, he said.

Even on containers, “We haven’t given back the increase we saw last year,” despite a decline in 2009, Wiers said.

And while fuel costs are down, they aren’t down enough to compensate for the higher wages companies must pay this year because of the 30-cent hike in  the minimum wage.

Wiers isn’t confident the increase in the minimum wage will have one of its desired effects.

“I’d like to think it would give us a higher-skilled employee but I don’t know that that’s the case.”

Equipment and seed costs also are higher for Wiers Farm this year, Wiers said.

The burden of production costs in 2009 should be much lighter than in 2008, said Loren Buurma, co-owner of Buurma Farms Inc., Willard, Ohio.
“Last year was crazy out of hand,” Buurma said. “This year is much better.”

Fuel costs are the only inputs that are lower so far this year, Buurma said. Container costs also are down, about 15%.
 
And while fertilizer and chemical costs haven’t fallen as fast as fuel costs have, they’re still down, he said.

Seed costs and, with the passage of a new minimum wage bill, labor costs are among those inputs that will be higher this season, Buurma said.

Ironically, the lower fuel costs actually could make the California summer vegetable deals more competitive this season, Buurma said.

Still, Buurma Farms looks forward to once again capitalizing on its proximity to well over half of the U.S. population.

And while the Golden State may compete on some commodities, Buurma Farms is confident about its advantage, regardless of freight costs, on one, Buurma said — radishes.


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