Inflation and Supply Challenges Are Tough, but Those in Florida Ag Industry Are Tougher
by PAMELA PALONGUE
With the Consumer Price Index measuring inflation at 5.4% in July, Bloomberg is predicting this rate will continue to hover above the 5% mark through the end of the third quarter in 2021. Supply chain interruptions and slowed consumer spending are contributing not only to slowed growth in the economy but also a continuing inflationary trend as producers struggle with a myriad of challenges.
The bright spot in all of this dismal forecasting may not be so much in the numbers and the data sheets, but more in the historic spirit of farmers’ fierce determination to succeed, no matter the obstacle.
Mike Roberts, vice president of Griffin Fertilizer Company in Frostproof, is seeing restrictions on essential ingredients for production that he has not witnessed in 10 years with the company. Certain products, such as sulfate of potash magnesia, are offered only on allocation.
“You’re offered so many tons, and if you need any more, you’re not able to get it,” explains Roberts.
*Much of the potash is used in the Midwest to produce corn and beans, which are not only widely used in the U.S. but are bought in large supply by China.
This raises concerns that with agriculture being such a time-sensitive industry, shortages of fertilizer product blends might leave growers with the inability to produce a healthy, robust crop. However, Roberts explains that despite the frustrating allocations, he does not feel that they are restrictive enough to cause a shortage in the ag industry and subsequently a food shortage for the consumer.
“Things aren’t that bad. In the spring, suppliers would run out of products, but only for a day.”
Oftentimes it wasn’t just the availability of the product itself that caused the delays. It was frequently a logistical problem in getting the ingredients to the company by truck or by rail. Roberts explains that Florida is a net user of products with more goods coming in than being transported out of the state. The pandemic has caused labor shortages in the trucking industry, and government benefits have been a hotly debated factor in workforce shortages.
He also cites an ongoing problem with the increased cost of insurance for truckers coming into southeast Florida, which is 30% higher due to a higher number of lawsuits.
Some economists maintain that inflation is good for farmers with increased market prices for their produce on the back end. However, that takes into account only the end price and not the increases in production for commodities.
“The cost of input is outpacing the net returns,” says Roberts, citing the increases in the cost of transportation, packaging and supplies. “Higher input costs are negatively affecting farmers. Ammonium nitrate has gone up year over year, with it costing $130 more per ton. Potash has tripled from a year ago.”
He adds that competition from Mexican-produced citrus crops is throwing the market off balance, further increasing the sting of inflation. “It will always be cheaper for crops to be produced in Mexico.”
Joe Garrison, a citrus grower from Dundee, echoes this sentiment. He believes government intervention may be necessary to level the playing field for U.S. citrus growers.
“The Federal government has got to step in and make it fair for domestic growers. We have unfair competition from Mexico.”
Garrison, who grows a combination of oranges and lemons, explains that the U.S. quality of production is better and held to a higher standard with government regulations on the use of chemicals, labor practices and increased hygiene to ensure that bacteria is not transferred to the fruit – a valid concern at any time, but particularly during a Covid outbreak. Additional quality controls cost additional money in production, and that is not necessarily reflected in the market price for growers.
“We sell our lemons for lemon juice. And they are generally $2 per pound cheaper from Mexico.”
With the cautionary aspect of rising inflation on the horizon, he’s had to be very cautious with spending for the sake of production.
“You can’t run a business and have a net loss, or even a 10% profit. You just can’t do it.”
Garrison also orders about 3,000 to 4,000 valencia orange root stocks annually. He has been able to get supplies, but he has noticed some delays due to labor shortages. He also has had a more difficult time getting PVC pipe because of a combination of drivers and trucks not available.
“People are not wanting to return to work,” he says, which has been a problem in all industries across the nation. Fortunately, the delays in supplies and labor shortages have not affected overall production. “We have our labor coming in on time for picking.”
With growers facing pressure from inflation, supply delays and the ever-present threat of greening, some have decided to exit the agricultural industry by having their lands rezoned from agricultural to residential. Developers are happy to snap up the land to meet the needs of Florida’s growing population.
Garrison, however, who owns a property management company himself, has no plans to sell out.
“I absolutely love what I do! And come hell or high water, nothing is going to stop me from my goal and my dream of growing lemons and oranges.”
Roberts also believes the challenges the ag industry is facing right now are transitory and will eventually level out. “At some point, it has to go back down.”
In the meantime, growers and ancillary businesses will continue to do what they love.
Garrison says, “We’ve got to fight through this till the end. Our country is depending on it. Just like it’s been done for many years before me, they’ll fight through this.”