Farmland values are increasing in the double digits. Prices for commodities such as corn and cotton are up an average of 41 percent over last year, driven by global demand. And farm household income is averaging more than $89,000 annually.

TOM FOX/DMN

Donald Patman, 76, grows soybeans, wheat and coastal hay in Ellis County. He says the rise in commodity prices hasn't been the boon one might expect: 'Prices have gone up so fast and furious that the farmer just can't keep up.'

But for Lloyd Arthur, who grows cotton in Crosby County northeast of Lubbock, there's just not much cause for celebration.

Mr. Arthur has seen his diesel, fertilizer and herbicide costs skyrocket right along with commodity prices in the last year.

"My input costs – what it costs for me to put crops in the ground – are significantly higher than a year ago, and they keep rising," Mr. Arthur said. "I built a little wiggle room in the budget, and now that's all gone. It really puts things into perspective."

The same is true for lifelong Avalon farmer Donald Patman. He and his son grow soybeans, wheat and coastal hay near Waxahachie in Ellis County.

"The increase in commodity prices, you'd think would help us," said Mr. Patman, 76. "But we can't take advantage of it because ... prices have gone up so fast and furious that the farmer just can't keep up."

Texas, which leads the nation in cotton production with $1.8 billion annually, has benefited generally from a healthy global agricultural demand.

Farmland values rose 18.4 percent in Texas to $1,480 an acre last year. And the U.S. Department of Agriculture estimates farm household income nationally rose 6.6 percent over last year to $89,434.

But that success has come at a cost.

Like their city cousins, Texas farmers are feeling the pinch in higher costs for gasoline and diesel fuel brought on by rising oil prices. And higher costs for fertilizer, herbicides, farm equipment and irrigation are also taking a toll. The volatility of the commodities market has kept many farmers like Mr. Arthur from locking in higher cotton prices in the futures market.

The picture of American farmers suddenly rolling in wealth is misleading, said Jim Sartwelle, an economist with the American Farm Bureau Foundation.

"Many Texas farmers, particularly those in the commodity market, are getting a good price – and they're paying a good price to get it," Mr. Sartwelle said.

"The year 2007 was a dream year in Texas when commodity prices took off – and the input costs had not yet caught up," he said. "Now, $125-a-barrel crude drives it all – and the costs of everything from fuel to seeds to spare parts has gone up substantially."

Farm Bureau research indicates that the farmer's share of the retail food dollar slipped from 30 cents in 1980 to 18 ½ cents in 2006.

Even the good news carries a caveat.

Nearly 85 percent of that annual farm household income is labeled off-farm – that is, money earned by spouses at jobs in town. Income from farm earnings alone has risen 16.3 percent from last year – to $13,629.

U.S. 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, particularly corn, according to Parr Rosson, an economist with the Texas AgriLife Extension Service.

Grain exports are expected to reach about 8 billion tons, thanks in part to the increased demand for ethanol. And corn, a principal ingredient in alternative fuel, will make up 72 percent of the increased tonnage.

"While expenses have increased [especially for feed, seed, fertilizer, chemicals, fuel and utilities], the large increase in cash grain and soybean sales should result in significantly higher farm earnings for the average farm household in 2008," the USDA report noted.

But Mr. Patman said fertilizer and fuel costs have eaten away at potential profits from the high commodity prices.

Cotton, which is going for $70.98 per pound, has gotten "so expensive to grow" because of the fertilizer costs that Mr. Patman said he cut back on the acreage he dedicated to the crop last year and this year.

"I'm mainly growing soybeans," he said.

The high demand for corn – both for food and fuel – is not driving the spiraling food prices in the U.S., according to a report for Texas A&M's Agricultural & Food Policy Center by economist David Anderson.

Rising energy and production costs are the underlying force driving change in the industry, Dr. Anderson said, though corn does play a role in some higher food costs.

"Higher production costs will continue to pressure acres as producers are faced with expensive fertilizer and diesel prices to plant crops," he said.

The 185,000 farms in Texas reported production expenses of $13.7 billion last year, according to the USDA, for an average per farm of $60,007.

Net cash farm income, exclusive of off-farm jobs, totaled $1.4 billion – or an average of $6,324 per farm.

At Mr. Arthur's farm, a midsize operation he runs with his brother, costs have risen faster and higher than cotton prices.

"When I upgraded equipment, I found that a used tractor that cost $80,000 in November had jumped to $90,000 in February," he said. "Cotton seed has increased 12 percent. The power to run my irrigation pumps has gone up. I have yet to find any significant item that we use day-to-day that hasn't risen in price."

When Mr. Arthur prepared his budget, he factored in cost increases of 10 cents to 15 cents a gallon for fuel. But that cushion evaporated in the first 60 days, he said.

"Right now, we have to get the crops in the ground. Already, we know we're going to have to make some adjustments, but we have to be careful so we don't affect the yield," he said. "A farmer has to be a financial manipulator. But this year, the changes just keep coming. Maybe we will plant soybeans. They're getting a good price."