It’s like a game. If I put only $10 in the gas tank, maybe prices will go down tomorrow (which is about how long $10 lasts and I have to stop at the gas station again).
It’s starting to sink in, however, that gas prices aren’t headed back to $2 a gallon any time soon.
For most of us, it’s an inconvenience.
OK, it’s more than an inconvenience; it’s a major crunch to the wallet.
But for farmers, fuel prices in the stratosphere not only crunch the wallet but can rip the shirt of the back, too.
Petroleum foundation. Just about everything we do in agriculture is linked to petroleum products, if not in the production, then in the transportation or energy end: gasoline, diesel, nitrogen, phosphate, potash, equipment, tires, feed. Grain dryers, farm trucks, milk transport, irrigation, greenhouse heat, plastic mulches.
Even elevators storing grain face higher shipping costs and pass that along to growers.
It hurts. In general, according to the University of Missouri, fuel consumption ranges from three to 10 gallons of fuel per acre, depending on the crop grown, type of tillage, age of tractor, etc. So, when diesel prices alone are up 30 percent to 40 percent from this time last year, it hurts. Hard.
If fuel prices remain at the mid-August level, University of Missouri’s David Whitson expects per-acre costs for fuel and fertilizer for growing corn to climb 15 percent to 19 percent.
And this year’s total production costs are likely to jump more than 20 percent for corn and 25 percent for soybeans.
One estimate this fall is that the average Northern Plains farm family will swallow roughly $18,000 in added costs because of higher fuel prices.
The current environment will have lingering effects, as cropping practices, application rates and contracts made this fall will affect a farmer’s production costs in the 2006 crop season.
Of course, consumers are not immune to the price spiral. It’s estimated that between 6 and 12 cents of every dollar spent on food consumed in the home represents transportation costs – and that’s a 2001 figure.
Attention to details. Just about every farmer is reviewing his energy use. University experts remind growers to make sure implements are clean; make sure every trip across the field is necessary; check tire inflations, and keep all power units tuned up and filters cleaned.
Get used to it. But don’t look for lower energy prices down the road. Iowa State University ag economists Mike Duffy and Darnell Smith say we’d better get used to it.
“In our opinion, the days of cheap oil are over and are not likely to return.”
(Editor Susan Crowell can be reached at 1-800-837-3419 or at email@example.com.)