June 14, 2008

Cost Hikes Pinching Farmers

By James Haggerty, The Times-Tribune, Scranton, Pa.

Jun. 14--Keith Eckel bought 140 tons of turkey manure to reduce his fertilizer needs this spring and is experimenting with no-till farming to burn less diesel fuel in his tractors.

"It's an extremely challenging time for us on the farm because we have these huge costs of production," said Mr. Eckel, of Schultzville, who has 1,250 acres of corn planted in fields in Lackawanna, Luzerne and Wyoming counties. "Any place that you can cut is important."

Newton Township vegetable farmer Mark Phillips and North Abington Township dairy farmer Paul Manning are scaling back on tractor runs to shave diesel expenses.

"Everybody is trying to finetune their operations to save money," Mr. Phillips said.

Energy prices continue to stream higher as fuel-dependent farmers struggle to contain costs. The buildup puts further upward pressure on food prices.

"One way or another, every farmer has more money tied up in their crops this year than they did last year -- a lot more money," said James Dunn, Ph.D., an agricultural economist at Penn State University.

Farms are energy guzzlers, requiring diesel fuel for tractors, gasoline for pickup trucks and fertilizer to nourish crops. Diesel prices are up 40 percent in the past year and gas is up 35 percent. Petroleum-based nitrogen fertilizer sells for about $700 a ton, nearly double year-ago prices, and potassium fertilizer prices have more than doubled, to about $675 a ton.

"Everything we touch is costing more and more money," Mr. Eckel said.

So, he bought truckloads of turkey manure from Pallman Farms in Clarks Summit to trim fertilizer outlays, and he tests soil by the acre before putting in nutrients.

"You can cut applications by 50 percent by banding fertilizer at planting time instead of broadcasting it," Mr. Eckel said

He also experimented this season with no-till planting on about 50 acres. The no-till method eliminates plowing during seed planting.

"The cost savings can be in the neighborhood of $40 an acre, and that's pretty significant," Mr. Eckel said.

Mr. Phillips cut costs when he decided to plow his fields twice before planting this spring, rather than the usual three rounds. He also bundles chores with machinery.

"When you go out with the tractor, you try to do a bunch of things all at once instead of wasting fuel," Mr. Phillips said.

Mr. Manning, who operates Manning Farm Dairy, also is reducing motorized work on his 350-acre property.

"We have to cut our trips over the field because diesel fuel is killing us," Mr. Manning said. "You're dropping 40-some dollars an hour in diesel fuel."

The Mannings have a nutrient advantage, though, that vegetable farmers lack.

"Manure becomes much more valuable," he said, and his 80 dairy cattle produce tons annually to fertilize the farm's corn, soybeans, hay and alfalfa. "Otherwise, we'd have to buy all commercial fertilizer and we'd really be up against it."

The U.S. Department of Agriculture projects farm production costs will increase 8.6 percent this year after rising 10.6 percent in 2007. Local farmers say the increase is much higher, including Jim Schirg, of West Abington, who estimates his costs already are up 18 percent over last year.

"You've still got to run the tractor every day. There's no way of cutting that cost, fuelwise," said Mr. Schirg, who farms about 40 acres of vegetables. "It's not like carpooling or something like that."

Most farmers trying to economize have limited options, said John Esslinger, Lackawanna County Co-operative Extension educator.

"For vegetables, you've got to do the things to make your crops grow. You can only cut back so far," Mr. Esslinger said.

"You can substitute a little of this for a little of that," said Dr. Dunn, the economist. "By and large, you have to stick pretty much with the recipe that you used last year."

"These guys need to hope that product prices reflect their increased costs."

Seasonally adjusted food costs in May were up 6.3 percent for the year, according to Bureau of Labor statistics, and local farmers said their produce prices will be higher.

"They've got to go up a little bit. We sure can't pass it all on," said Mr. Schirg, who sells his produce at the Scranton Co-op Farmers Night Market, which will open in mid-July. "You've got to take a cut in your profit and hope for the best."

Mr. Phillips, president of the farmers market association, knows the food price pressure consumers face and is guarded about the local effect.

"We're gambling on getting stuff sold," he said. "We don't know if people are going to come to the marketplace."

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