AFBF Fuel Costs Up 34% Year Over Year
According to USDA estimates, the cost of fuel, lube and electricity is expected to increase 34% over 2021 numbers. American Farm Bureau Federation economist Shelby Myers says farmers are feeling the pinch.
“They've been facing these price increases all throughout the spring and they've been working to get what could be one of the most important crop years planted. And for growers, they've expressed a lot of concerns about availability and delivery of the diesel fuel for when they needed it most, especially as we face some of these delayed planting times. So, that window to plant crops this year was smaller than usual, so it meant that fuel delivery had to be timely, but that also meant it came at a cost.”
U.S. fuel supplies traditionally decline in the spring and summer with increased demand, but Myers says there are additional factors this year pushing those prices up to record levels.
“What’s making this even more difficult is that the U.S. does not have the same amount of additional supply being produced or even coming into the country that would supplement this increased demand. And so, we continue to see evidence where the U.S. economy is trying to play catch up, all those production slowdowns and interruptions that were created by COVID-19, and we've added in additional hurdles like Russia's invasion into Ukraine, it's really impeded the ability for the supply chain to catch up with demand.”
Should these price increases continue, Meyers urges farmers to consider what options they may have to seek relief.
“It's really about managing the risk to the price increases and that uncertainty of price increases and finding ways to reduce cost creatively," Myers noted. "There are crop insurance products that are available that can help insure against input prices for farmers that would include diesel and fertilizer, but it's really limited to a few states and only corn, soybeans, rice and wheat. But it's also a really good opportunity to have conversations with local fuel retailers for the opportunity to price hedge and utilize on-farm fuel storage.”
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