Rising fuel prices raise hurdle for farmers

ORIGINALLY WRITTEN BY JULIE ANDERSON
With crop prices already low, area farmers face an added burden as fuel prices continue to rise.



Farmers are looking for ways to offset the additional fuel costs.



?It?s just a cost I?m sure our producers haven?t really planned for or budgeted for, but it?s going to have an impact on their operation as prices continue,? said Steve Tonn, Marion County extension agent.



He said the high fuel prices are making a tough economic situation even more challenging.



?I think they are concerned already,? Tonn said of area farmers. ?It is going to have an impact on them this year.?



He said the increases haven?t had affected them yet because farmers haven?t used a lot of fuel for field work. But the concern is still there.



?I think it is a concern in the fuel end of it because of production on the farm,? said Marvin Ratzlaff, who farms north of Hillsboro. ?The (grain) prices are so low already, less than break even. This just adds another hurdle to make farming a profitable enterprise.?



To offset the increase, Ratzlaff is thinking about changing his farming practices to do less tillage of his fields.



But, he said, that involves other management decisions on different kinds of farming practices.



Ratzlaff feels it would help farmers who are not involved in any no-till practices to take another look at their strategies.



?That is something I think more farmers will get involved in looking at,? he said.



Clark Wiebe, another Hillsboro farmer, has only done no-till on an as-needed basis. Otherwise, he does reduced-till or conservation-till.



?My goal is to make a two-pass system?in other words two tillage trips only before planting time,? Wiebe said. ?If I can accomplish that and keep my chemical costs down, I think it is a good mix, or match, for me.?



Wiebe also will be substituting some chemicals rather than tillage to control weeds more economically.



To produce his crop efficiently and in the most economical manner, he plans to keep tillage to a minimum.



?There are some operations that you absolutely cannot exclude, so no matter what happens, they will have to be done,? Wiebe said. ?We?ll just hope for the best.?



Tonn said he doesn?t expect a lot of farmers to switch to no-till this spring.



He said the prices may spur more people to begin thinking about no-till farming, but it requires some preparation before going into it.



?Someone who hadn?t no-tilled probably isn?t just going to switch this spring just because fuel prices are higher,? he said. ?But if this continues, yes, that may be something people would look at in the future.?



Presently, fewer than 1 percent of Marion County farmers are completely no-till. About 10 to 20 percent do some no-till farming.



Another way Wiebe keeps costs down is by contracting fuel in advance to lock in prices. But that did not work this year.



?I thought (the price of fuel) was a little too high when I normally do that, which was late in the winter or earlier this spring,? he said. ?I postponed that only to my dismay that (prices) worked themselves quite a bit higher.?



Wiebe has noticed more than a 100 percent increase in the price since last year.



?It?s gone from 50 cents a gallon to over a dollar a gallon, so that definitely will impact the bottom line if everything else stays the same,? he said. ?From what I understand, it looks like it is going to go higher before it goes lower.?



Wiebe has contracted some of his fuel to protect himself if fuel prices continue to increase. This lets him know what to expect for the short term.



Lyman Adams, general manager at Cooperative Grain & Supply, said in the past few years contracting fuel didn?t really pay off because prices had been stable. He said most of their customers are on a cash basis.



He said there is concern about meeting costs because the margins were so slim to start with.



?It?s alarming for them,? Adams said.



Loren Funk, who farms northeast of Hillsboro, also is concerned with the increase in prices.



?It is definitely a concern because it definitely affects the bottom line,? he said. ?However, I have been trying to do minimal-till, not a complete no-till, but a minimal-till operation and utilizing outside sources such as Ag Service or (CG&S) to apply some herbicides to keep down my costs.?



Funk said he would probably continue farming as he has in recent years, but he has bought some diesel fuel in advance and done some other things to try to protect himself.



?Any penny helps, I will guarantee you,? he said.



Funk said it will be important for farmers to know their cost per acre because prices will be increasing.



He said fuel prices affect farmers directly and indirectly. Higher prices will raise the cost of having items and parts shipped in.



In addition, the fuel price increase also could affect the cost of fertilizer and possibly pesticides down the road.



Kirby Rector, Ag Service agronomist, agreed.



?Fertilizer is going to gradually creep up,? Rector said.



The cost will be determined by how much fuel continues to increase, he added. Fertilizer costs have already increased some.



Fertilizer is not something farmers can cut back.



?It takes a certain amount of nutrition to keep up production,? Rector said.



Rector said farmers have to find ways to cut expenses without cutting production.



?The problem is it?s kind of out of my hands and out of the farmers? hands,? he said. ?They are going to have to figure out a way to deal with it.



?It?s not a good scenario with the depressed economy,? Rector added. ?It?s just an unfortunate situation.?



Meanwhile, Tonn said small and large farm operations will be affected, although it may be more difficult for the smaller producers to generate revenue to cover the increased costs.



Said Funk: ?Every business has a risk, and whether it?s the increased fertilizer prices, increased diesel prices or increased whatever, you just try to use the best management tools available to protect yourself in those kind of positions.?



He said in the long term, farmers have to put out a crop, and no matter what prices are, farmers have to work the ground at the right time.



?It?s probably kind of difficult to make a lot of adjustments right now,? Tonn said. ?It will probably be more during the season.?



He said farmers who plant soybeans, might want to consider planting Round Up-ready soybeans so they can control weeds with less tillage.



Ratzlaff said they try to save unnecessary driving in their vehicles, but their lifestyle is geared to driving a lot.



?There aren?t a whole lot of things we can do if we want to maintain the lifestyle we are used to,? he said. ?We just keep paying at the pump or at the fuel barrel so we can maintain what we are used to.?

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