Report: Fuel prices to hurt farmers

Friday, September 16, 2005 | 12:00 a.m. CDT; updated 9:17 a.m. CDT, Saturday, July 5, 2008

Missouri farmers will be paying more to harvest crops this season because of higher fuel prices, according to a recent report issued by the MU Food and Agriculture Policy Research Institute.

The report said that because of fuel prices, the cost of harvesting will increase $5 per acre for corn, $3.20 per acre for soybeans and $2.75 per acre for wheat from last year, , excluding hauling costs.

The rise in harvesting costs is due to a leap in more than just one fuel cost. Diesel fuel is required to run machinery to harvest the crops, propane gas is used for drying grain and natural gas is found in nitrogen fertilizers.The report comes only days after the U.S. Energy Information Administration issued its short-term energy outlook Sept. 7, which assessed the oil and natural gas supply through 2006. The Energy Information Administration’s report predicts that diesel and natural gas prices will increase again in 2006, 3.8 percent and 17.7 percent respectively. Although it is not as drastic as the price jumps experienced in 2004-2005, farmers will still be faced with a tough decision.

“It’s going to impact their profits or their break-even points for this year and probably also going to have impacts on what types of planning decisions they make next spring,” said Lori Wilcox, energy analyst at MU Food and Agriculture Policy Research Institute.

Wilcox said some farmers may be forced to switch to crops with lower production costs or reduce the frequency with which they use natural gas-based fertilizers. She said farmers who plant corn, Missouri’s second largest crop in production, will be hit the hardest.

“Corn is more of a fuel consuming commodity,” Wilcox said. “It takes more fuel to get it out and also requires a lot more fertilizer. It may mean that they were going to plant 100 acres of corn and maybe now they are thinking about only doing 50.”

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