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Fuel, fertilizer prices expected to keep climbing
By Chris Anderson
canderson@pantagrap.com
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Central Illinois farmers planting their corn and soybean crops are paying fuel prices 113 percent higher than four years ago, according to a University of Missouri energy economist.

Fertilizer prices - largely based on energy costs due to the petroleum products comprising fertilizer - have increased 70 percent during the same period.

Lori Wilcox, UM Food and Agricultural Policy Research Institute economist, expects fuel and fertilizer prices to increase 10 percent to 15 percent this year. In fact, she sees no relief in sight. Her projections show fuel and fertilizer costs increasing for the next 10 years above 2005 levels.

Abner Womack, FAPRI co-director, said the trend is unprecedented. In the past, energy prices would come back down following a spike, he said.

Farmers' concerns about soaring energy costs were reflected in planting intentions this year. Illinois farmers said they would plant 11.4 million acres of corn, 6 percent less than last year. They said they'll plant 10.1 million acres of soybeans, an increase of 600,000 acres from last year.

Missouri cohorts followed suit. Farmers there plan to reduce corn acreage by 11 percent and increase soybean acreage by the same amount. That's because it costs an estimated $124 per acre in fuel and fertilizer costs to produce high yielding corn. That compares to $38 per acre for soybeans.

Soybeans don't get fertilized with nitrogen because the plants make their own. Soybeans also require fewer trips across the field, reducing fuel costs.

Monthly fluctuations in diesel prices over the last six months have ranged from a decrease of 52 cents per gallon to an increase of 27 cents per gallon, according to Wilcox. At a price of $2.22 per gallon for farm diesel, the per-acre cost of fuel to till, plant, spray and harvest a crop would be about $11 for corn and $7 for soybeans.

Tillage choices impact fuel use.

Farmers can achieve some serious fuel cost savings by using reduced tillage systems, such as strip-till and no-till. In fact, a University of Illinois study showed tillage boosts costs by $9.50 per acre and increases fuel use by 2 gallons.

Gary Schnitkey, U of I Extension farm financial management specialist, said strip- and no-till use about 2.4 gallons per acre. Traditional tillage practices use 3.7 gallons per acre. At $2.50 per gallon for diesel fuel, traditional tillage costs about $3.25 more per acre than strip- or no-till.

Strip-till uses only one tillage trip for application of anhydrous ammonia fertilizer. No-till uses no tillage at all. Traditional practices often include one pass with a field cultivator prior to planting and a chisel plow pass following harvest on land previously planted to corn.

Schnitkey noted farmers need to weigh using reduced tillage systems against possible yield losses or increased pesticide costs which may occur from using the practices.

Heading to a new pasture

This column will be my last for The Pantagraph. After covering agriculture for 28 years, it's time to move to a new pasture at Bloomington's Country Insurance & Financial Services, where I'll work in media relations.

The agriculture industry's evolution in the last three decades has been astounding, to say the least. Astonishing advancements in technology have increased food production efficiency by a hundred-fold.

But the industry's people - farmers, implement dealers, seed sales representatives, bankers, university specialists, agrichemical dealers, grain elevator managers, attorneys, commodity brokers, government agency employees, agriculture teachers, FFA/4-H members and conservation technicians - remain passionate, hard-working and stalwart. They are rooted, literally, in Central Illinois' rich soils.

It has been a supreme privilege to have been invited into and accepted within your ranks.

And always remember - if you eat, you're involved in agriculture.

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Reader comments on this story - 8 total

Note: All views and opinions expressed in reader comments are solely those of the individual submitting the comment, and not those of the Pantagraph or its staff.

Another Visitor wrote on May 4, 2006 12:10 PM:

" Visitor said: "Any increase of fuel cost will make all food expensive, especially if it comes from long distances... If fuel becomes very expensive, small scale labor intensive farming will again become the norm." Actually, the farmer will have to absorb the cost of fuel since he's a price taker, not a price maker. To the extent a farmer cannot cut costs elsewhere to keep himself profitable, he may go out of business. It won't necessarily be the small ones that are left. "

Visitor wrote on May 4, 2006 9:32 AM:

" The farmers hobby puts food in our stomachs. Any increase of fuel cost will make all food expensive, especially if it comes from long distances. For food security, we need farmers in our country. If fuel becomes very expensive, small scale labor intensive farming will again become the norm. I thank the farmers for my food. "

To: Right wrote on May 4, 2006 6:23 AM:

" Think about all the fertilizer products that are applied to peoples lawns across this country. I went out to buy my four step program at WalMart and found that prices have went way up. I have now found a small company that is doing mine and saving me some money that way. I hope these price increases does not run them out of business. These price increases are going to effect more people in more ways then we are really thinking about. "

http://reasonandvision.blogspot.com/ wrote on May 3, 2006 10:00 PM:

" Hard opinions above. I guess farmers SHOULD go on strike until they can get "fair prices" to cover their costs. I agree subsidies are a poor choice for everyone, but higher prices are the only answer I know - higher prices for FOOD and FUEL. Ideal farms would "grow their own fuel". At least farmers could feed horses if they liked, but there'd be a lot less food/acre then, and prices would be a lot higher! "

http://reasonandvision.blogspot.com wrote on May 3, 2006 9:45 PM:

" The subsidy argument is not simple. Ideally farmers ought to earn enough to cover their costs. The scary thing for me is that "

Right... wrote on May 3, 2006 6:44 PM:

" Farmers are the biggest welfare recipients on the face of this earth. They just don't like the term because it describes what farm subsidies really are. Try another arguement. If you can't make it farming, get in another line of work. Quit relying on the taxpayers to fund your hobby. "

awwwwww wrote on May 3, 2006 3:18 PM:

" awwwwwwwwww...get a life. farmers feed u and soon will fuel your vehicle...without them you would NOT exist..maybe that's better for you awwwww "

Awwwwwwwwwww wrote on May 3, 2006 9:10 AM:

" I'm sure they'll find a way to subsidize high fuel prices too. End all farm subsidies now. "
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