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Page added on March 30, 2006

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Fuel prices may pinch farmers

…the volatility of fuel costs are driving farmers to lock in their fuel prices at the Middleton Co-op, said petroleum manager Ladd Pettit. At $2.40 per gallon Tuesday, diesel is up between 40 and 50 cents at the co-op from last year’s planting season, Pettit said. But farmers are still willing to lock in those prices so they can put a number on their production cost.

“At least then you know what you’ll be paying,” he said.

And because of that volatility, Pettit will only contract fuel prices through June this year as compared to full-year contracts the last several years. Pettit said his customers are growing accustom to the high fuel prices. “Most (farmers) are just realizing that it’s kind of the way of life now,” he said.

Prices for nitrogen fertilizers are also up due to the large quantities of natural gas needed to produce it, said Paul Mitchell, an agricultural economist at UW-Madison and UW- Extension. The cost of urea, a nitrogen fertilizer used in Wisconsin, has risen to $350 per ton this year, up 7 to 10 percent from 2005 and up about 75 percent from 2002.

Mitchell said the increase in fuel prices has “a relatively larger effect on farmers, since most agricultural inputs and outputs are bulky. This has affected not only the cost of hauling harvested grain from fields and to local elevators, but also for . . . inputs such as fertilizer, seed and agricultural chemicals.”

Wisconsin State Journal

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