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Farmers Face Even Higher Fuel Costs

posted on September 9, 2005


That the hurricane's economic impact reaches far beyond the Gulf Coast is without question. Some estimates put the damage to farmers nationwide at $2 billion. That includes $1 billion in direct losses ... and $500 million in higher fuel and energy costs.

The higher energy prices reach deep into farm country in the form of more expensive diesel fuel, rail costs and barge rates. That, in turn, has slashed the prices farmers get for a variety of commodities they grow.

And at a time when farmers are ready to reap the bounty of harvest, many are having to sit down and refigure the bottom line.

 

Farmers Face Even Higher Fuel Costs

Hurricane Katrina will push fuel prices even higher for farmers just in time for harvest season. According to the United States Department of Agriculture, farmers were expected to spend $2 billion more on fuel this year even before the storm.

The American Farm Bureau estimates Katrina's destruction will result in $500 million in higher fuel and energy prices for the agriculture industry. The average cost per gallon for diesel fuel is $2.90, up 31 cents from a week ago. Meanwhile, people nationwide are paying an average of $3.07 per gallon at the pump. This price is up 46 cents from last week.

Rising fuel prices are squeezing farmers at a crucial time. Corn and soybean harvests already have started in some parts of the country, and are just weeks away in others. Producers are getting pinched in other ways, as well. Prices are higher for petroleum-based products like fertilizer, pesticide and lubrication. And, farmers are receiving less for their crops because shippers and food manufacturers are paying more for transportation and manufacturing.

USDA recommends farmers make some adjustments to save money, such as...

" Field-drying their grain " Reducing their fertilizer applications " Changing their tillage practices " Changing the amount of acres they plant " And, switching to a less energy-intensive crop.

But, USDA admits the adjustments will have a relatively minor impact on farmers wallets.

 


Tags: agriculture disasters Hurricane Katrina hurricanes news oil storms weather