Price At The Pump: Fuel Costs Add Pressure Through Surcharges

High fuel prices are creating another financial headache for farmers through transportation surcharges that can ultimately reduce the price producers receive for their crops.

With diesel prices above $6/ gallon nationwide, and higher than that here in the Northwest, those prices are already putting pressure on farm budgets, but higher fuel costs also raise expenses for railroads, ocean vessels, and other transportation providers.

Those added costs will make their way back to farmers through a lower price at the point of sale, particularly in competitive global markets. Transportation providers generally have three choices: pass higher costs to customers, absorb them, or pass them back to suppliers through lower prices.

For agriculture, the third option is often the most likely.

Diesel prices in Washington currently average $7.27/gallon. Oregon's rate is $6.67/gallon, while Idaho motorists are paying $6.17/gallon.

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