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Farmers Cringe As Rising Diesel Costs Add Thousands to Fill-Ups

Posted on: Saturday, 20 August 2005, 00:00 CDT

Aug. 19--If filling a 15-gallon gas tank seems expensive these days, just imagine filling a 300-gallon storage tank.

Storage tanks at area farms can range in size from 300 gallons to 2,000 gallons, and "normally, this is a time when most of the farmers will fill up and get ready for harvest," said Neil Wolfgang, petroleum manager for the Ag Plus cooperative's energy division in New Haven.

When orders come in over the phone, "every call is talking about it. It is a big concern," he said. "Having to pay prices of fuel right now will drastically hurt them for the fall." Per-gallon diesel prices are close to regular unleaded prices at many service stations, in the $2.60 range. Because it doesn't include road taxes, the off-road diesel with higher sulfur content used in heavy farm equipment costs about 40 cents less per gallon than the diesel sold for road use. The off-road diesel also is exempt from a 6 percent sales tax.

But prices for diesel fuel have risen more steadily and they started rising earlier this year than the prices for unleaded gasoline.

"(This summer) we've seen diesel fuel prices up to 70 cents higher than they were last year at this time, and now they're even climbing more," Wolfgang said. "When you get to add a dollar a gallon onto 2,000, (a $2,000 expense) it's a lot of money." Roger Schaefer has a 600-gallon tank for off-road diesel on his farm and a 300-gallon tank for regular unleaded. He paid $1.73 a gallon for premium diesel when he last filled the larger tank May 24.

"My tank's pretty full right at this point. When I finished planting this spring, it was very low, and I wasn't sure I would have enough to get that done, so I went ahead and fueled. It was accidental, not on purpose," he said. "I'm not looking forward to when I have to fill it, though, the next time." Brian Roemke farms about 3,600 acres with a brother, Mark, and a neighbor, Paul Fordham, from a base about three miles southeast of Harlan. The cost of diesel fuel has risen 20 percent since they locked in a price on enough of it to get them through the harvest, he said.

"The increase in prices isn't going to affect us this fall, but ... this spring it's going to have an effect," Roemke said. "It's just going to cut into our profit margin, since we have no way to pass it on." Using a hypothetical budget for a typical Indiana farm with average farmland, Alan Miller, a farm management specialist at Purdue University, projects the machinery fuel cost per acre for corn and soybean production in the state will increase at least $6 to $18.40 an acre next year.

Higher energy prices also make fertilizer more costly and make it more expensive to dry corn, he said. Miller projects next year's overall production costs will increase 10 percent for corn and 12 percent for beans.

"Energy costs are a key element for that, and where we've seen the biggest percentage price increase for that is in the diesel," he said. "Fuel was only 3 percent of total production expenses in Indiana in 2004, and we're thinking that's certainly going to have to climb." Some farms may respond to the higher prices on what they call production inputs by adopting new technology or modifying their approach to planting. Both Roemke Farms and the Schaefer operation are completely no-till, and expect the soil-conserving approach to planting to come into even greater use in the area next year, because it burns less fuel.

"When all you're doing is running the planter, versus tilling the ground in the fall and having to work it two or three times in the spring, we easily cut (the fuel cost) 50 percent," Roemke said.

Roemke Farms uses site-specific farming to minimize its use of soil nutrients that are rising in cost. Using soil test data with precise farm maps, a sprayer equipped with a satellite navigation system applies nutrients exactly where they're needed instead of blanketing an entire field.

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Copyright (c) 2005, The News-Sentinel, Fort Wayne, Ind.

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Source: The News-Sentinel (Fort Wayne, Ind.)

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