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Cost of Diesel, Fertilizer
Dries Up Farming Profits

by Associated Press
Capital Press, November 19, 2004

LEWISTON, Idaho -- Wheat farmers say the high price of diesel is shriveling profits in what would otherwise be a good year.

Wheat prices at Portland this past week were about $3.94 a bushel, up 50 cents from a year ago.

But the prices of diesel fuel, natural gas-based fertilizer and farm equipment have increased, leaving many farmers with profit margins at barely break-even levels.

Diesel prices are more than 68 cents a gallon higher than a year ago, with last week’s national average hitting $2.16. In Northern Idaho, the average price is even higher at $2.32 a gallon.

“This is just increasing the cost of everything to some extent,” said Primeland Cooperatives Manager Ken Blakeman. “They get less for their grain and they pay more for their inputs. Everything that impacts the farmers has gone up massively.”

The high fuel prices affect nearly every part of the farming process — from preparing the land for planting to moving the finished product to market. Ninety percent of the region’s wheat is shipped by barge from the Port of Lewiston to Portland, and the cost of barge fuel has more than doubled, Blakeman said.

“There’s nothing you can do in our current system. The cheapest transportation is still the barges, and if you were to try to go to trucks, it would be way worse,” he said.

There is nothing farmers can do but be as efficient as possible, said Grangeville farmer David Bodine.

He uses direct seeding — drilling seed directly into unplowed ground and skipping conventional tilling methods — to cut down on the number of times he must drive over a field. Though some farmers fear the method does not produce as much grain, Bodine said the lowered costs were a huge benefit.

“There really isn’t anything else you can cut back on anymore,” Bodine said. “We’ve always been kind of lean and mean, so we will continue to do that and hope for the best.”

Lapwai farmer Dick Wittman also uses direct seeding and is a firm believer that it pays off.

Even so, he said, the higher price of fuel this year has added a minimum of $3 to $4 an acre in production costs.

“Farmers are continually working at ways to make the business more cost-competitive,” Wittman says, “but then you have these cost increases that wipe out a lot of these gains.”

Meanwhile, the cost of natural gas-based fertilizers is also rocketing as companies in the United States drop out of the market. The product can be manufactured more cheaply overseas, Blakeman said.

Though that will likely help farmers in the long run, Blakeman said, the price of fertilizer is expected to remain high until the market adjusts.

Associated Press
Cost of Diesel, Fertilizer Dries Up Farming Profits
Capital Press, November 19, 2004

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