Farmers feel pinch of soaring fuel costs
Alvin Diamond uses diesel fuel to power a wide array of equipment on his 450-acre dairy farm in Nicholson Township. The four tractors that he operates need it.
His skid loaders, high lifts and feed and manure trucks also run on it, as do the trucks that bring supplies to his farm.
As the price of fuel continues to rise, so does the cost of business for Diamond, and he and other local farmers say they may be running on empty and soon may have a hard time paying their bills.
The average price of a gallon of regular gasoline is more than $2.40 per gallon, compared with $1.86 a year ago and about $2.21 in April, according to the American Automobile Association (AAA).
And, costs may keep rising. Prices for crude oil reached a record of more than $66 a barrel Friday, almost 50 percent higher than they were a year ago.
Mark O’Neill, media relations director for the Pennsylvania Farm Bureau, said the cost of fuel has a major impact on farmers who run both large and small operations.
“Any increase in the cost of fuel has a direct effect on the farmers,” he said.
Unlike other businesses, O’Neill said, farmers cannot raise the price of their product, even if it costs them more to produce it.
“It’s a very serious problem,” he said. “It’s not something that will directly put farmers out of business, but it does cut into their profit margins.”
O’Neill said he recently visited about 10 local farms in early July, and all of the farmers he talked to were concerned about the rising price of fuel.
Diamond, president of the Fayette County Farm Bureau, said farmers are paying twice as much for fuel as they were this time last year.
“That’s taking money away from us that we use to pay other bills,” he said.
Diamond and his two sons, who are partners in the farm, plant enough corn and hay to feed 550 cows. Around the end of summer, when it is time to harvest the corn, Diamond said, it’s not uncommon to use 400 to 500 gallons (about $1,000 worth) of diesel in one day.
“There will be several days in a row where we will use that much diesel,” he said. “It adds up quickly.”
In addition, he said, the rising price of gasoline affects farmers because they have to pay more to have feed and fertilizer delivered to them. The cost, he said, will make more farmers “push the pencil harder” while trying to balance their budgets.
Diamond said farmers have no choice but to buy fuel, despite the high cost, if they went to keep their farms running.
“When you’ve got a business to run, you’ve got things you got to do and you need fuel,” he said. “Some farmers may have to go without some things they can do without, but they can’t go without fuel.”
Diesel prices have risen 104 percent over the last three years, according Terry Francl, a senior economist at the American Farm Bureau in Washington. The price of the main component in fertilizer has risen, and the costs for trucking in fuel or trucking out produce are also going up because of gas prices.
James Griffin of Griffin Farms in Smock said the rising price of fuel is a problem for all farmers.
“And, I don’t know that it’s something that will be fixed any time soon,” he said.
Griffin, vice president of the Fayette County Farm Bureau, said the rising costs don’t affect him as much as it does other farmers, because he runs a small farm, planting only 60 acres of corn and 60 acres of corn and soybeans.
O’Neill said the state Department of Revenue encourages farmers to take part in the Liquid Fuel Tax Refund Program, which reimburses farmers 26 cents a gallon – the cost of the state tax – for all gasoline used for agricultural purposes. However, the program does not cover diesel fuel, because it is not taxed for farmers, he said.
As for federal income taxes, O’Neill said, farmers can write off 18.4 cents per gallon of fuel.
He said he doesn’t think the price of fuel is going to put any farmer out of business, yet, but he did say it is a major concern for many.
“It absolutely affects farmers and is, without doubt, a problem,” he said.
The farmers apparently aren’t alone in their concerns about fuel prices.
An Associated Press-America Online poll showed that 64 percent of those surveyed said they expect gas prices will cause money problems for them in the next six months. In April, 51 percent expressed such concerns.
Editor’s note: The Associated Press contributed to this story.