Farmers hit hard by soaring fuel costs

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Farmers hit hard by soaring fuel costs

By LOWELL BROWN/Tribune-Herald staff writer

Charles Hansen could buy gas last year for 60 cents a gallon to operate the equipment on his southern McLennan County farm.

But now, as petroleum costs soar nationwide, Hansen pays over $1 a gallon, and the long-term price tag for fuel may be even more than that for many other local farmers: It could cost them their livelihood.

"Fuel costs are up 50 percent from last year, and from our products (farmers) are getting less," said Hansen, president of the McLennan County Farm Bureau. "As fuel went up, practically everything else went up."

The ascending gas prices mean less profit for Hansen and other Central Texas farmers, many of them already struggling to break even because of depressed commodity prices. Diesel fuel is essential for operating tractors and other farm machines, and petroleum is used as a base for fertilizers, pesticides and other common farm chemicals. Diesel fuel purchased for agricultural use is cheaper than gas bought by drivers because it not subject to federal and state gas taxes, said Tom Manor , service manager for Diesel Power Supply Company in Waco.

The increased cost of fuel and fertilizer is troubling to Hansen, who is growing mostly corn this year on his 3,000-acre farm 16 miles south of Waco.

"My farm is in danger," Hansen said. "If we could get corn up to $4 (per bushel), it wouldn't hurt so bad, but with corn at $2, the high cost is critical. It's really taking its toll."

Wes Sims , president of the Texas Farmers Union, predicted a dark future for many Texas farmers.

"Devastation is the best word for it," Sims said. "People have to hope for a better price (for commodities) than these depression-era prices that won't even start to pay the bills. I don't think that most people realize how bad it is. It may be the killer."

Sims, who operates a 1,700-acre farm near Sweetwater, Texas, said farmers across the state are losing money because they can do nothing to deflect their increasing fuel expenses.

"Farmers don't have any control on what we get for our products" because of federal price caps, he said. "A farmer has no control over his fuel costs, except to just not use any, and that means reducing his production. It's a no-win situation."

Doug Andrews echoed the farmers' concerns.

"Any extra cost has to be absorbed by the producer, and the (profit) margins are very thin as it is," said Andrews, McLennan County agent for the Texas Agricultural Extension. The group distributes research information to farmers and is associated with Texas A&M University.

Gene Hall , spokesman for the Texas Farm Bureau, agrees that high petroleum costs are hurting farmers and said he hopes Congress will act to ease farmers' burdens.

"Bad (commodity) prices plus increased (fuel) costs add up to a dismal situation, and it's getting worse," Hall said. "We're hoping for a good farm bill to ensure a food supply for the United States."

Congress passes a farm bill about every four years and will consider a new one soon, Hall said. The bill provides a safety net for farmers by providing for emergency aid in case of droughts, low commodity prices or other disasters, he said.

Sims said Congress should act quickly to provide aid.

"I'm hoping for better legislation in the future," he said. "Economic assistance is the fastest and most sure way to help."

Without help from Washington, many farmers will be forced to go out of business, Sims predicted.

"I broke even this year," he said. "That's what every farmer is trying to do right now ójust trying not to lose more money."

Hansen said that, despite the fuel costs, he and other farmers will continue to produce crops because their work is critical to people worldwide.

"We don't have any choice," he said. "We have to have (fuel) out here to feed this world with food, and we're gonna do it. That's our business. We take our chances and hope we'll do better in the future."

Lowell Brown can be reached at lbrown@wacotrib.com or at 757-5742.

http://www.accesswaco.com/auto/feed/news/local/2001/05/29/991173943.05955.3857.1778.html

-- Martin Thompson (mthom1927@aol.com), May 30, 2001

Answers

The free market price of no commodity can remain below its cost of production for long. This is especially true if storage capacity and life is limited, which is clearly the case with food.

Futures market prices for new crop grains (corn, wheat, soybeans) are still at a very low premium over old crop grains. The markets may still be in mass Denial of this new realtiy. Summer "fireworks" in the electrical grid may extinguish this market aberration quite soon.

Hyperlink: http://quotes.ino.com/exchanges/?c=grains

-- Robert Riggs (rxr.999@worldnet.att.net), May 31, 2001.


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