Login Profile Get News Updates
For local news delivered via email enter address here:
PDF of Print Edition Mobile Tablet

General

Worship Directory

Business Directory

Classifieds

Real Estate
Farm and Ranch News March 14, 2017  RSS feed

Texas Crop and Weather Report:

Rising fuel prices could mean higher costs for producers and consumers
Writer: Adam Russell


Two anyhydrous ammonia fertilizer tanks sit in a Texas field. A Texas A&M AgriLife Extension Service economist said rising fuel prices could hit producers at the pump and increase other input costs like anhydrous ammonia fertilizer and irrigation. (Texas A&M AgriLife Extension Service photo) Two anyhydrous ammonia fertilizer tanks sit in a Texas field. A Texas A&M AgriLife Extension Service economist said rising fuel prices could hit producers at the pump and increase other input costs like anhydrous ammonia fertilizer and irrigation. (Texas A&M AgriLife Extension Service photo) COLLEGE STATION – Rising fuel prices could mean higher costs for producers and eventually consumers, said a Texas A&M AgriLife Extension Service economist.

Dr. Mark Welch, College Station, said he saw indications of fuel prices bottoming out late last year. And since January, there have been signs of overall inflation within the economy.

Higher fuel prices will mean an increase in input costs for farmers who are preparing land and planting 2017 crops, Welch said. It will also likely mean higher costs for irrigation, fertilizer and chemicals that aid optimum field production.

He said the concern is what higher fuel prices will mean not only to production budgets but the overall costs of producing, shipping and storing commodities.

“It goes beyond the diesel in the tractor and gas in the truck,” Welch said. “When fuel prices are high, it costs more to make things and move them. It affects food prices. Everything is tied closely to energy.”

Direct fuel costs today make up a small portion of production budgets, Welch said. Farm equipment is more efficient in fields, covering more acres or doing more in a single pass.

Diesel and gasoline fuel costs amount to around $6 to $8 per acre for a typical dryland grain sorghum or cotton crop, according to AgriLife Extension-based budgets, Welch said. The cost of fertilizer is around $12 to $20 per acre, twice the cost of fuel.

For irrigated crops, direct gasoline and diesel are little changed but fertilizer increases to $50-$60 per acre and irrigation fuel adds $40-$50 per acre.

A larger impact for producers is how fuel prices can impact other costs, such as fertilizer, Welch said. Fertilizer prices are low now, but about 75 percent of the cost associated with producing anhydrous ammonia, a commonly used fertilizer, is natural gas.

Typically, there is a lagged commodity price response at market to fuel prices and other increased costs on the input side, Welch said.

“It can make things difficult for producers when commodity prices are falling and costs continue to rise,” he said.


Readers Comments

Post new comment

The content of this field is kept private and will not be shown publicly.
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.
By submitting this form, you accept the Mollom privacy policy.