[Fair Use: For Education and Research Purpose Only]

HIGH FUEL COSTS ANOTHER HEADACHE FOR FARMERS

February 17, 2000

BY Robert Pore of the Plainsman

Farmers and ranchers are also feeling the bite of higher fuel and energy costs.

Al Porter, petroleum manger for the South Dakota Wheat Growers in Huron, said high fuel and fertilizer costs will hit farmers when it comes time to start using their field equipment.

"We have a pre-pay program and some of the farmers took advantage of that by buying a little bit earlier," he said. "But there are a lot of them who haven't bought yet and they are sitting and kind of waiting back and hoping they get a little relief."

But they may be waiting for a while as energy officials predict that the prices will stay high.

"We have a few farmers talking about going to a little bit more no-till this year, which will cut down their fuel costs," Porter said.

Not only are farmers impacted by high fuel costs in the use of their machinery, but many of them also own trucks to haul their grain and livestock.

"The bad thing about the farmer is that he can't pass on these higher costs because there is nobody behind him to pass those costs on to," Porter said.

He is also nervous about possible fuel outages.

"A lot of dealers are sitting pretty low right now," he said. "They are also kind of waiting for a break right now, but I don't think it is going to happen."

The timing of the higher fuel costs comes at a bad time for farmers as they prepare for spring planting.

"It's not a good situation, but I do marvel at those farmers out there because they are so hard working and optimistic and resilient," he said.

Porter said the cost of fertilizer is also going up because it is petroleum based.

"I think the cost of their fertilizer is a little bit more on their mind right now than fuel because there is a heck of a lot of cost in that fertilizer that they put out there," he said.

"When the farmer does well, we do well and if he isn't doing well, we feel it." Burton Pflueger, Extension economics specialist at South Dakota State University in Brookings, said higher fuel costs are a concern for producers on top of a lot of other problems impacting the state's agricultural industry.

"I don't think it is their driving force right now," Pflueger said. "It will increase their cost of production, but I think that they have more things that are bothering them right now, such as low commodity prices and the GMO issue. The rising cost of fuel is somewhat of an unfortunate blip, and I think for most producers it is just another one of these cost-of-doing-business things that they are going to have to put up with."

Crop values in South Dakota have declined 18 percent in the last two years and that has had a tremendous impact on farmers' income. Also, the prospect of dry conditions this spring, which could impact yields, is a growing concern with producers.

"The timing of these increasing input costs isn't something that producers need to deal with right now, especially when it comes to worries about possible drought conditions and continuing low commodity prices," Pflueger said. "But as we look toward the spring planting season, the issue of the drought is causing them more concern than rising fuel prices. It's just another thing they have to worry about."

But Pflueger said higher energy costs do impact producers because agriculture is such an intensive user of energy, from the fuel needed to power their vehicles and farm equipment to the fertilizer and chemicals they use on the land.

"A lot of companies and co-ops have already bought their fuel, fertilizer and chemical needs for the year," he said. "The question is will these higher cost be passed on to producers, kept in the business or does it come back to the members as patronage. I think when we get a change in fuel prices like this, we are really drawing attention to one more thing farmers and ranchers have to worry about and hadn't planned for this year."

Another aspect when high energy costs impact farmers and ranchers is in transportation costs of getting their crops and livestock to market.

He said the trucking industry is an important component of the state's agricultural industry when it comes to hauling grain and livestock to market. But high fuel costs also heavily impact the trucking industry's operating costs.

"If these higher fuel costs really start to get out of line even more, it is not going to stop with just trucks either," Pflueger said.

He said some of those higher energy costs for hauling grain and livestock could be passed on to the farmer and rancher by the trucking firms that do business with state producers.

"They won't retain it as an economic development cost or anything like that," Pflueger said.

He also noted that rural communities that depend on the trucking industry for transportation of goods and rural residents who either make low wages or live on fixed incomes will be impacted.

"Thankfully, we have had a warm winter. Otherwise, we start to impact the cost of operating schools, churches, businesses and everything else," Pflueger said. "But these higher energy costs really have a rippling effect on a rural state like South Dakota."

http://www.plainsman.com/Article_headline_display.cfm?ArticleTypeID=1

-- Dee (T1Colt556@aol.com), February 21, 2000

Answers

Dee,
Good article.
We are seeing Diesel @ $1.38 (Road legal version) in Central Texas.
Haven't checked the Co-op price for Tractor Diesel in a while.

-- Possible Impact (posim@hotmail.com), February 22, 2000.

Farmers could go on strike like truckers. Heck, it's just a matter of time before they're forced into the public service workforce anyway (like everyone else with a 'trade' that isn't high tech). They'd probably do as well with a minimum wage job. Jiffy Lube or Midas Muffler could put them to work waiting on owners of SUV's with payments the size of a home mortgage or they could serve and support working women via Burger King or KFC. They might even have benefits. We already import the clothes on our backs and the shoes on our feet. What possible harm could importing our food create? This isn't a new problem, it's just a new twist in an old one.

Be sure to vote for your favorite NWO Representative in the upcoming election (unless you're one of the 6% who support Alan Keyes and intend to 'waste' your vote). Whoever wins had better be good at dominoes, if you know what I mean...

-- Will continue (farming@home.com), February 22, 2000.