Home » NEWS » Fuel costs dim prospect of profit for producers

Fuel costs dim prospect of profit for producers

Agriculture is the number one industry in the state, representing an approximately $5.6-billion impact per year. But high energy costs are threatening to take the profit out of the highest commodity prices seen in many years. The higher fuel prices impact agriculture not just for fuel to run tractors and other equipment, but also in the form of increased costs for one of the largest input expenses — fertilizer.

“Fertilizer is one of the biggest costs we have on the farm,” said Mississippi Farm Bureau president David Waide. “The high price of energy is having a tremendous impact. Energy has just gone through the roof. It has doubled the cost of all the fertilizer I’m purchasing. It depends on what analysis of fertilizer you are buying, but I’m sure that is true across the board. This is putting a major hurt on people. A good many farmers put out fertilizer last year at old prices. For those purchasing fertilizer at current prices, it is going to take most of the profit out of higher commodity prices. That is as general statement, but I guess it is true in more cases than not.”

Waide said the Farm Bureau has been advocating for relief by getting anti-dumping tariff’s removed for some of the fertilizer being imported into the U.S. If that could be done, it would take some pressure off fertilizer prices.

But regarding the price of fuel, there are no easy answers at hand.

“It looks like we are at the mercy of OPEC,” Waide said. “We have sat on our duffs for so long and not done what we need to do to be energy independent. Now, we are paying the price.”

In addition to costs for running equipment and purchasing fertilizer, the higher diesel prices also impact what producers must pay to transport goods to market. With large diesel trucks averaging five to eight miles per gallon, it is costing in the range of 50¢ to 60¢ per mile to get products to the processor. Then the semis taking products to market are experiencing those same costs per mile.

One of the problems, Waide said, is that the U.S. dollar is becoming so devalued compared to other countries currency.

“That is a problem we are going to have to figure out a way to solve,” he said. “As our dollar shrinks in value, it is good for farm exports. But it is bad for buying oil with cheap dollars. It takes a lot more of them to get the oil. We need to try to work on that to get things back to some kind of normality.”

Contact MBJ contributing writer Becky Gillette at 4becky@cox.net.

About Becky Gillette

Leave a Reply

Your email address will not be published. Required fields are marked *