agriculture

Basic costs keep rising

LA PRENSA

Decisions: The price of some fertilizers and the price of fuel have increased dramatically in recent years, forcing growers to reconsider what they can afford to plant.1010839

Some of the main inputs for agricultural production have increased more than 100 percent recently, and that is forcing farmers to reconsider what crops are worth growing. The high cost of fertilizer for products such as rice and corn, for example, may be discouraging farmers from growing them, say sources within the industry.

Dagoberto Tuñón, president of the Asociación Nacional de Distribuidores de Insumos Agropecuarios y Maquinarias (Andia), said that the price of the complete fertilizer known as 12-24-12, which is composed of 12 percent nitrogen, 24 percent phosphorus and 12 percent potassium, rose 100 percent from 2007 to 2008. A 70 percent increase in freight costs and an increase of 130 percent in the price of phosphorus are the main reasons for that, Tuñón said.

The growing global demand for inputs destined for large-scale biofuel production has also driven up prices.

The Andia, which is made up of 16 companies, is trying to control costs by buying futures. "We have been able to maintain some acceptable market prices with this strategy, but in some cases, it has been totally impossible because we are talking about products derived from petroleum, the price of which is determined internationally," explained Tuñón.

The president of the Asociación de Productores de Arroz de Chiriquí, Alexander Araúz, says that "the situation is troubling, because inputs are a major factor when the time comes to decide what quantity of hectares will be devoted to [rice]."

The national agricultural board of the Ministerio de Desarrollo Agropecuario (Mida) calculates that in order to produce a hectare of rice using the dry system---which depends on rain rather than irrigation--- costs $1,572.66, including an investment of $696.97 in inputs. The cost of producing a hectare of rice using irrigation meanwhile costs more than $1,900, with an investment of $679.65 in inputs.

To these costs must be added those of machinery, labor, transportation, rent, technical assistance, agricultural insurance, administration and others.

Rice growers aren't the only producers affected by the high cost of inputs required to obtain a good harvest. Banana, palm, root and tuber growers are feeling pinched, too. The price of urea, a good fertilizer for those crops, has shot up in price recently. The Panamanian government decided to subsidize the cost of urea by importing large quantities at state rates, that is, without paying taxes and labor and other costs, and then offering it for sale through its Instituto de Mercadeo Agropecuario (IMA).

The president of Andia rejects this kind of state subsidy. The role of the state is to step in when there is a shortage, Tuñón said, "not get involved in a purely private activity."