Fuel prices to hurt farmers

LEWISTON – Winchester farmer Eric Hasselstrom has parked his diesel rig for the season and is driving around an old Nissan two-wheel-drive pickup truck that gets better gas mileage.

He tries to avoid any unnecessary trips to town, and when he has to pick up parts, he tries to find neighbors who can run errands for him.

It’s about the only way Hasselstrom says he can cope with skyrocketing fuel costs hitting him just as he begins spring field work.

“It’s going to be scary when we really get to working in the field because it’s going to be expensive,” Hasselstrom said. “We’re captive. We’re told what we’re going to get (on a bushel of wheat) and we’re told what we’re going to pay. It’s the only business that can’t pass along their expense.”

Fuel prices are posing a double whammy to farmers this year as they plant their fields. Besides diesel fuel prices that are as much as a dollar per gallon higher than last year, farmers also are paying a premium for fertilizer, much of which is made from natural gas.

There are other costs – at the end of the season when farmers send their harvested crops to the West Coast for shipment overseas, higher transportation costs will cut into the profits.

And farmers, unlike most other businesses, do not control the price of their product. Although they are compensated to a degree by the federal government through crop loans and subsidies, most farmers will see their profit margins, which have been shrinking since the mid-1990s, atrophy even further.

Hasselstrom said he converted to direct-seeding cultivation a few years ago, which minimizes the number of times he has to drive over his fields to seed and fertilize.

“The only way you can make up for (rising fuel costs) is working the field less, but I’ve already adapted to that,” the farmer said. “Some of the guys that are still conventional farming could cut their costs, but they’ve got to pay for that big drill.”

Paul Patterson, a University of Idaho agriculture economist, said the higher prices of fuel have hit farmers at a particularly vulnerable time.

“There are two times of the year when higher prices hit farmers and that’s in the spring when they’re doing their field work and in the fall during harvest,” Patterson said. “Most farmers are already running about as lean an operation as they can. They have very few places where they can cut costs.”

Patterson said both direct and indirect fuel prices can add 10 to 12 cents onto the cost of raising a bushel of wheat, so a farmer working a 1,000-acre farm could spend an extra $8,000 to $10,000 to raise the same quantity of grain he raised last year.

And even that’s not certain because if yields are lower this year than last, those expenses will make the cost of operation climb even higher.

Although it’s still too early to tell, Patterson said there are indications there will be higher wheat production in the United States and around the world this year, meaning lower prices by the end of the season.

“The issue is whether oil prices are going to spike again,” Patterson said, “or are we going to maintain the current high levels?”

That’s a question even the guy who delivers the fuel to the farm can’t say for sure.

“You never know what prices are going to do from one day to the next,” said Bill Jacobs, an independent oil distributor at Grangeville.

“There are five major oil companies that control all the prices and the crude, and they own the pipelines. I’m an independent, so I’m at the mercy of the big oil companies.”

Jacobs said being in a remote area is a disadvantage because all of the gas and oil has to be trucked into the Northwest.

He buys his products from seven to eight different suppliers and checks the prices every day to see where he can get the best buy.

“Farmers want to know why the price is so high, and I don’t have many answers because I only buy and sell on a daily basis,” Jacobs said. “We try to fill up everybody before the price rises but it doesn’t always work out. I try to make sure my people are taken care of, but there’s no way of really second-guessing that stuff.”