High Input Costs and Low Crop Prices Pose Challenges for Flathead Producers
Despite decent crop yields this harvest season, farmers are faced with low commodity prices for the second year in a row as tariffs raise prices of equipment and fertilizer
By Maggie Dresser
On the 3,200 acres of land in the Creston area where Doug Manning grows cereal and pulse crops, he’s noticed good yields so far this harvest season. But his winter wheat isn’t popping with its usual amber color, and the markers indicating high protein are down.
“We’ve had decent yields overall, but it suffered on the quality side,” Manning said. “The rains came and usually we like the rain, but it was a little late.”
This July, Kalispell saw more than 1.63 inches of rain – nearly a half inch above normal. The mid-summer moisture boosted spring-seeded yields, but it resulted in lower quality crops for Flathead Valley producers and will lead to price docking at the grain elevator.
But the weather is only one variable that factors into the harvest season as global markets, commodity prices and recent trade agreements stifle northwest Montana’s agriculture industry.
A relatively strong global wheat supply has contributed to low prices as farmers enter a second year in a row of low commodity crop prices.
“The prices are just terrible,” said Tryg Koch of Heritage Custom Farming.
For his winter wheat crops, Koch says cost of production is about $6 per bushel; meanwhile, the cash price at CHS Mountain West in mid-August hovered around $5 per bushel.
Meanwhile, canola crops are trading at $657 per metric ton in Canadian dollars. Medium green lentils are hovering around 21 cents per pound while yellow peas are roughly $6 per bushel.
Even as crop prices lag, agriculture market consultant Lance Wilson says wheat prices are bouncing back from lows set in August of 2024.
“Wheat sales are above last year’s pace – despite the thought that tariffs would reduce that,” Wilson said. “Some countries are purchasing on goodwill – there are so many ins and outs of the trade that it’s hard to digest what is all happening with the tariffs and how it’s affecting commodity trade.”
As the largest international wheat supplier, Russia has kept prices high after a season of inconsistent yields, which impacts U.S. prices.
“Russia is the largest exporter of wheat and it’s harder to gauge the size of their crop,” Wilson said. “Their estimates throughout the growing season have ranged widely.”
Despite tariffs, export prices have not been significantly impacted at this point, but farmers are reporting higher input costs on things like equipment and fertilizer, much of which is imported from Canada.
After the 25% tariff was imposed on Canadian products, phosphate fertilizer has shot up to $700 per ton and Manning said prices are anticipated to hit $900 per ton in the coming months.
“Fertilizer prices are insane – they are not sustainable,” Koch said. “With these high fertilizer prices, it’s going to make it difficult for farmers to make any money. There will be fewer winter wheat acres planted due to the high fertilizer prices and with the low commodity prices. Farmers are wondering – what do we plant?”
To adapt to the high prices, Koch says farmers will likely produce more pulse crops like lentils, peas and chickpeas, which don’t require as much fertilizer as winter wheat or canola. Other techniques, like the “split-apply” method, can conserve fertilizer, which requires farmers to closely monitor the weather instead of using it all at once.
While farmers could plant more pulse crops to save money on fertilizer, they would also be subject to a 10% import tariff on lentils with India that the country introduced this spring.
Trade has been historically unreliable with India, according to Eric Belasco, the department head of agricultural economics at Montana State University, and tariffs have been ongoing for years.
“A lot of those exports go to India, and that’s been a volatile relationship,” Belasco said.
New tariffs that the Trump administration imposed on India took effect on Aug. 27, bringing levies to a total of 50%, half of which the administration tacked on as a punishment for India buying Russian crude oil.
“The sad thing is, that’s been a market that’s growing in Montana,” Belasco said, referring to pulse crop exports. “There’s a lot of potential and there were plans to sell more to India.”
In an already unpredictable industry, policy changes and unstable trade agreements are adding stress to many producers, but some say it’s still too soon to tell exactly what’s causing market shifts.
Susan Lake, a grain farmer in Ronan, says she likely won’t see the impacts until next year.
“At this point, we are just harvesting crops,” Lake said. “Covid left supply chains in worse shape and it’s more an increase in input costs right now.”
Koch, of Heritage Custom Farming, said he’s already seeing tariffs driving prices up for farmers, primarily with input costs, which cover things like seed, fertilizer, fuel, pesticides, labor, and land. He describes the high input and low commodity prices as mentally taxing.
“We’ve been struggling with prices for the last two years,” Koch said. “Most farmers have bank notes or loans and it’s not fun having to roll a line of credit year after year. The reality is, if something doesn’t change with crop prices in the next year or two, you’ll see more farms come up for sale.”
Manning – the farmer in Creston – said the policy changes add another unpredictable aspect to agriculture.
“It’s just another element out of our control,” Manning said. “We deal with it.”