Farmers feeling squeeze of pricey fuel

jholland@modbee.comOctober 16, 2012 

and JOSHUA EMERSON SMITH jsmith@mercedsunstar.com

Fuel costs have been on the rise at a time of year when farmers are especially busy harvesting nuts and field crops, as well as tilling the ground for new plantings.

"The overall expense of fuel is one of my highest expenses," said Scott Hunter, an almond farmer south of Livingston. "So seeing a 10, 12 percent increase; it's money I have to put into my fuel tank and not into fertilizer or something else that can improve my operation."

A gallon of diesel cost an average of about $4.43 in California as of Monday, according to the U.S. Energy Information Administration. It was $4.02 at the start of August and $3.13 two years before that.

Diesel and gasoline prices are putting pressure on farmers' bottom lines, but economists say it's unlikely that will translate into significantly higher food prices across the nation.

That's because fuel is only a small percentage of the cost of farming and getting a product to store shelves, said Daniel Sumner, an agricultural economist at the University of California at Davis.

Food prices will go up, but only by a few pennies on the dollar at most, Sumner said. The increases have happened at a time when farmers in California and across the nation are doing fairly well overall.

The value of the farm industry broke records in Merced and Stanislaus counties, registering a combined gross farm income of more than $6 billion, according to agricultural department reports.

But if farmers pay increased production costs, including for fuel, their profit would drop, and with it their ability to invest for the future. And higher fuel prices may make California food less competitive with overseas imports, Sumner said.

For dairy farmers, fuel costs add to troubles with low milk prices and high feed costs.

Fuel-efficient tractors and other equipment can ease the impact of paying for feed trucks coming in and for milk trucks heading out, said Ray Souza, a dairy farmer west of Turlock.

"Basically, for the last three or four years, we've been looking for every savings we can," he said.

Fresno County fruit grower Keith Nilmeier has been making only one pass, instead of three, as he makes furrows through his orchards and vineyards. At the same time, his supervisors drive smaller cars around the fields.

"I'm trying to figure out how to get more efficient about using the equipment and saving more fuel," Nilmeier said. "But we're getting down to the point where I keep looking at what else can I cut out, and I'm running out of options."

The recent surge in prices came after a power failure at a California refinery, which reduced supply, and corrosion issues in an important pipeline, analysts said. The refinery has come back online.

Many trucking companies that haul farm products impose fuel surcharges on farmers and other customers to protect themselves against fuel price fluctuations, said Michael Shaw, spokesman for the California Trucking Association.

Sun-Star staff writer Joshua Emerson Smith can be reached at jsmith@mercedsunstar.com or (209) 385-2486.

Modesto Bee staff writer John Holland can be reached at jholland@modbee.com or (209) 578-2385.

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