Trends in agricultural input relative to product prices

Upward trends in prices may reflect rising quality of inputs, or increases in manufacturing costs due to rising labor, capital, or material costs. Based on a price comparison of five categories of agricultural inputs, the largest change during 1994-2010 was in crop seed prices, which more than doubled relative to the price received for agricultural commodities sold by farmers. This increase was due, at least in part, to the increase in value-added characteristics developed by private seed and biotechnology companies through R&D programs. The sharp rise in the price of fertilizer in 2008-09 was driven by a significant increase in the cost of energy and materials used to manufacture fertilizer, as well as an increase in transportation costs and the falling value of the U.S. dollar. For agricultural chemicals, prices rose relative to commodity prices during 1994-99 but have since fallen. The recent decline partly reflects the rise in crop commodity prices after 2005 as well as an increasing market share for off-patent (generic) crop protection chemicals. This chart is found in Research Investments and Market Structure in the Food Processing, Agricultural Input, and Biofuel Industries Worldwide, ERR-130, December 2011.

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