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Farmers seek respite as production cost spikes

27
May '08
Insatiable global demand for cotton and other agricultural goods have pushed commodity prices 41 percent higher over the previous year giving an impression that farmers are literally rolling over money. However, only through a closer study can the real picture be drawn out.

Rising cost of fuel, fertilizer and irrigational inputs are undermining the profits emerging from better returns. High demand coupled with soaring prices of inputs is putting enormous pressure on acreage which is gradually contracting as farmers seek minimizing risks and losses.

Fortunately in some cases like that of Texas, cotton production of US $1.8 billion annually has resulted in substantial profits but all because of high global demand. However, farmers even here haven't managed to escape the pinch of rising cost of production driven by soaring oil prices.

As a result most of these farmers are quoting higher prices in cotton futures trading contributing to a rise in the prices of these goods. US agricultural exports are expected to hit record levels of more than $101 billion in 2008, with more than two-thirds of the total value attributed to high commodity prices.


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