U.S. farmers squeezed by record diesel prices

Leah Douglas, Lisa Baertlein

and Nichola Groom

REUTERS

WASHINGTON – In northeast Missouri, Addie Yoder, a corn, soybean and cattle farmer, runs two combines, three semi-trucks and several tractors from mid-September to late October to harvest and transport her crops.

With diesel prices at record highs and just one combine requiring 300 gallons of the fuel, the best she can do is try to curb other expenses, she said.

In southeast South Dakota, Drew Peterson, a soybean, corn and cattle farmer, expects to spend as much as $1,500 per day to fuel just one of his combines this season, double last year’s costs, among the many machines he must use to bring in his crop.

'You can’t just say, well, diesel is expensive, I’m not going to harvest,' he said. 'You’ve just got to make it work in your budget.'

Across the United States, farmers are confronting record-high diesel prices during the height of harvest season, further squeezing already thin margins. Price hikes seem inevitable at grocery stores ahead of November’s elections, where cost of living is expected to be a primary voter concern.

Global fuel supplies have been squeezed by the U.S.-Israeli war on Iran and Ukrainian attacks on Russian refineries. The average U.S. diesel price recently hit a new record of $6.29 per gallon, up 68% from $3.74 a year ago, according to Energy Information Administration data.

Higher diesel prices raise costs in every step of the food supply chain, from harvesting on farms to freight delivery that carries food to grocery stores, said David Ortega, an economist at Michigan State University.

'The majority of our food moves on trucks and those trucks use diesel,' Ortega said.

Consumer food prices rose 2.7% year-on-year in August, according to the latest Consumer Price Index.

Farmers have access to off-road diesel, which is not subject to state and federal taxes. But even with the discount, many farmers are still paying significantly more for fuel than last year.

Wayne Gularte, who grows a variety of vegetables on roughly 600 acres near Gonzales, California, said his fuel costs have risen about 40%, from roughly $5 a gallon to $7 a gallon.

To save on costs, he has put some older gasoline-powered tractors from the 1950s back into service and parked one of the farm’s diesel pickups. 'The only money we can make is the money we save,' Gularte said.

Farm fuel costs are up $11 per acre from last year for corn and $7 per acre for soybeans, according to Michael Langemeier, an economist at Purdue University.

Corn, soy and wheat futures all have rallied significantly since mid-August and hit multi-year highs in early September. Still, farmer margins remain thin compared to historical averages, said University of Illinois agricultural economist Nick Paulson, who warned high fuel prices could raise costs next year for seed and fertilizer.

Many farmers have already tightened their belts, leaving little margin for fuel price increases, said Jon Paul Driver, a hay farmer near Spokane, Washington, and second vice president of the Washington Farm Bureau.

'Any increase in fuel right now is additional debt for the farm,' Driver said.

Across the United States, farmers are confronting record-high diesel prices during the height of harvest season.

Amira Karaoud/REUTERS file