Fort Dodge Messenger, IA
09-29-06
Cost of fuel to rise by 10 percent
By KELLI BLOOMQUIST, Messenger news editor
While many drivers are seeing relief at the fuel pump as gasoline prices continue
to plummet, farmers preparing to harvest fall crops are instead having to grit their
teeth about the costs of fuel.
While the price of diesel has fallen marginally in recent weeks, the cost of fueling
up combines, tractors and semis needed for harvest is anticipated to hover in the
$2.60 to $2.70 range according to fuel experts.
‘‘No immediate relief is evident,’’ reported the Food and Agricultural Policy
Research Institute in its fall fuel outlook.
In fact, FAPRI is reporting that the prices paid by producers for fuel this year will
be more than 10 percent above prices from one year ago and are more than
double the level experienced in 2002.
‘‘Higher fuel costs are impacting many business sectors and agriculture is no
exception,’’ said the fall report. ‘‘In fact, each stage of the production process for
agriculture is heavily impacted by increases in fuel prices. Producers were faced
with diesel prices for spring planting that were substantially higher than costs
experienced in recent history.’’
Yet while diesel prices have slightly fallen since fields were planted, the cost of
fuel used to harvest the crop is associated with approximately 60-percent of the
overall cost of production. According to the U.S. Department of Agriculture, direct
fuel costs comprise 14 to 21 percent of the variable costs of production for most
major crops.
In fact, fuel prices were so high throughout the summer that some farmers were
reportedly contemplating an added risk of leaving crops in the field longer in
hopes of falling diesel and drying costs.
‘‘This is something that the farmer faces every year,’’ said Iowa State University
Field Specialist Jerry Weiss. ‘‘Farmers look at the weather outlooks to see if
they can afford natural drying instead of having to purchase drying fuels to do it.’’
‘‘I’m planning to take my fields out on time,’’ added T.H. Hoefing, who farms
throughout the Manson and Gilmore City areas. ‘‘We usually try to price protect
by buying ahead on fuel. I think a lot of farmers wait until a certain time, but for us
when we contract fuel we can take them out at any time.’’
But diesel prices aren’t the only price tag that farmers are keeping an eye on as
harvest nears. Increases in natural gas costs are expected to be felt by
producers not only this fall, but also into the spring.
FAPRI is reporting that farmers will feel the pinch in drying their crops as natural
gas costs could rise by 10 percent. This increase would result in the cost of
natural gas being more than 70 percent higher than that of 2002.
‘‘Natural gas and propane prices are higher,’’ said Weiss. ‘‘Primarily drying fuels
are up. Last year was a good natural drying year that farmers could leave their
crop in and it didn’t need to be dried. Even with the rains that we’ve seen
recently, we’re still in the growing season. There hasn’t been any damage done.
The crops are just now maturing and with good weather, the farmers should be
able to start getting in.’’
Overall, farmers should see an increase of 10 to 20 cents per gallon of propane
when drying down grain this fall.
Despite rising costs, Weiss reports that some farmers may be seeing record
crops while others will see decreases in bushels per acre.
‘‘It’s really spotty,’’ said Weiss, who covers a 20-county area for Iowa State
University Extension and is based in Pocahontas County. ‘‘Some farmers are
seeing their best crop ever because of the rains and the weather. Some though
are seeing a 10 to 20 percent decrease in normal yields and were in disaster
areas because of lack of moisture this year.’’
No matter what area of the state though, farmers continue to see an increase in
cost. However, a shift in pricing could be on the horizon as the Energy
Information Administration is reporting that 2007 should be more positive for ag
producers as energy related costs are not expected to increase and slight
declines are expected. The EIA does warn however that low input prices
experienced in 2002 will not be seen again anytime in the future.