Drought, Rising Fuel Costs Take Toll on Farmers

By Gene Zaleski, The Times and Democrat, Orangeburg, S.C.

Oct. 7–Growers remain hopeful they will see a profit this year despite a September with little to no rainfall reducing crop yields and high fuel costs greeting farmers as harvest season begins.

Calhoun County farmer John Olson says he is keeping his fingers crossed that he will have a good year, despite the challenges of a two-month drought, projected average to below-average yields and high fuel costs.

Olson farms about 400 acres of peanuts, 600 acres of cotton and a couple of hundred acres of corn and wheat out of the St. Matthews, Lone Star and the Cameron areas.

“We had an awful dry spell there for awhile,” Olson said, while in his field digging peanuts. “Peanut yields are going to be down a little bit because of the dry weather, but not too significantly. The peanuts have been able to handle this dry weather better than any other crop out there.”

The key at this moment is getting the peanuts out of the ground.

“Digging conditions are really bad right now,” Olson said. “Sand is really giving us a hard time too. There is just not enough moisture in the soil to get the resistance we need.”

Olson said dryness has virtually “devastated” the soybean crop.

“Soybeans got hurt real bad (due to the drought),” he said. “What little soybeans we had suffered from the bad weather.”

Hugh McLaurin, 725-acre peanut and cotton farmer with fields both in Orangeburg and Calhoun counties, said the 2005 crop season is a good example of the words of wisdom his father gave him a long time ago: “The Lord will giveth and taketh away.”

“Is it as good as last year? No,” McLaurin said. “Last year was a year to remember for a long time. This is usually the case. Last year every crop was phenomenal and off the charts. This year all is good to very good.”

Olson’s and McLaurin’s challenges are not isolated, Orangeburg County Clemson Extension Agent Lewis Beckham said.

“The guys are wearing out the knives on their (peanut) diggers because of the hard ground,” Beckham said. “The yields on peanuts during this late season drought have basically cut off production of peanuts at a critical time.”

Preliminary figures reveal that yields have fallen from 5,000 pounds in 2004 to an estimated average of 3,000 to 4,000 pounds. With much of the peanuts under preset contracts, farmers can expect to receive between $380 and $400 a ton.

“We are having to dig a lot of peanuts ahead of when we normally would have dug them, Calhoun County Clemson Extension Agent Charles Davis said. “There is no life in them (peanut plants) and we have to go ahead and get them. We did not want to, but we really did not have a choice.”

Echoing Olson, Beckham said preliminary assessments on the soybean crop reveal that record dryness for September “hammered” what started out as a “promising soybean season.”"It is going to be dramatically hurt on dryland soybeans,” he said. “The lack of rain pretty much cut off plants putting on pods at a critical time when they needed water.”

Yields at the 30-bushel to 40-bushel range would be considered a “good year,” Beckham said.

“The yields have dropped to the point that we are not too worried about the soybean rust we were so worried about before,” Beckham said. “The dry weather has cut down on the spread of diseases. The income potential is not an issue if we spray fungicides.”

With regard to cotton-rich Calhoun County, Davis said it is “too early in the game” to tell the impact of the dry September.

“Any time you put a plant under stress, it can go to pot quickly,” he said. “I expect the fiber quality … to be off. This affects the spinabilty of the cotton and the cotton’s ability to absorb dye.”

Cotton prices, too, are lower than desired, hovering around 52 cents per pound to 54 cents per pound. Farmers typically like to see prices at 80 cents per pound.

While prices are expected to hover at lows, growers received some relief from the dryness as Tropical Storm Tammy dumped rain in the region this past week.

Fuel costs In addition to lower actualized and projected yields, farmers are having to struggle with fuel costs. High prices will particularly hit during harvest time when equipment use spikes.

“Oh my!,” Olson said, when asked about the impact of fuel costs on his operation. “It is going to cost us extra fuel that will come out of our profit.”

Olson, who has farmed utilizing the conservation method of no-till, says fuel costs have thus far been curtailed in that till trips have been cut down.

“The fuel crunch has not hit us yet,” Olson said. “But harvest is something that consumes a lot of fuel. We will most likely see larger expenses.”

Fuel costs of $3 and more a gallon and commodity prices — corn selling about $2.50 a pound — do not bode well for farmers having to ship their crops by truck, the most common shipment method.

“You have to get it delivered to market to get paid,” Olson said. “We are competing against railroads in the Midwest. They are government-subsidized. Here we are delivering ours by trucks. Costs are going up all the time.”

“The fuel situation is so evident,” Beckham said. “It is obviously hurting a lot of folks.”

The average U.S. retail price of a gallon of regular unleaded gasoline was $2.80 earlier this week, below the all-time high of $3.06 on Sept. 5, but almost a dollar more than a year ago.

The average price of diesel fuel averaged $2.73 a gallon or 82 cents higher than a year ago and nearly doubled what it was in September 2003.

“Fuel costs have gone up and the cost of ginning has gone up with the high natural gas prices to dry the cotton,” Davis said, noting that farmers were able to save some money with the corn harvest. “The weather cooperated with us. Farmers were able to let the corn dry in the field, not in the grain bin.”

Lower yields, low commodity prices and high fuel costs will mean a difficult combination for most farmers, Davis said.

“Break even is about the best we can do,” Davis said. “We just don’t see a lot of hope there for upward movement in profitability.”

McLaurin said that fuel, which is typically purchased in bulk, is up about 10 percent, but that makes up just a fraction of his total cost.

Fertilizer, which is linked to crude oil, is a greater concern.

Fertilizer costs are between 35 percent to 45 percent higher.

“As fuel prices go up, fertilizer costs skyrocket,” McLaurin said, noting the cost of chemicals such as phosphate and potassium also has risen. “It will ease into your profit, but we are looking at three years in a row. That is almost unheard of.”

Beckham, however, noted there is a possible “silver lining” in the fuel-cost situation in the form of the utilization of biodiesel.

“I am personally sitting at my computer doing research on soy diesel,” he said. “I have a feeling that it is going to be pretty important to us in the future.”

Alternative fuels such as biodiesel can used in diesel engines without modification.

Biofuels have traditionally been more expensive than petroleum products, but with petroleum prices skyrocketing, the incentive to switch to biofuel could become more attractive, Beckham said.

“If farmers could tough it out a little bit, these high gas prices will make biodiesel more competitive. It could open up a major new market for soybeans.”

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