Diesel Prices Create New Problem

American farmers are confronting another serious financial challenge as record diesel prices collide with the critical fall harvest season.

Across America’s agricultural heartland, farmers are operating combines, tractors and trucks to bring in major crops including corn and soybeans. But the diesel fuel required to power that equipment has become dramatically more expensive, adding another substantial operating cost for farms already dealing with expensive fertilizer, seed, chemicals, machinery and other agricultural supplies.

The national average price of diesel climbed above $6 per gallon in September, according to AAA, reaching record territory after a dramatic increase in global energy prices.

For farmers who consume hundreds or even thousands of gallons during harvest season, the difference can translate into thousands of dollars in additional expenses.

And unlike many motorists, farmers cannot simply stop driving.

Diesel Prices Hit Farmers at the Worst Possible Time

Harvest season is one of the most fuel-intensive periods of the year for American agriculture.

Combines must travel through thousands of acres of farmland. Tractors pull equipment and grain carts. Trucks transport corn, soybeans and other crops from fields to storage facilities, grain elevators and buyers.

Every step requires energy.

That makes higher diesel prices particularly painful for farmers because fuel is not an optional expense.

Paul Mitchell, a professor of agricultural and applied economics at the University of Wisconsin-Madison, explained that the financial impact extends well beyond harvesting.

Farmers also need fuel to move grain and silage from fields to farms and then transport those agricultural products to their final destinations.

When diesel prices rise sharply, those costs can spread throughout an entire farming operation.

Missouri Farmer Says His Diesel Costs Have Doubled

Jason Kurtz, a corn and soybean farmer near Forest City, Missouri, said he is paying approximately twice as much for diesel this year.

His combine consumes around 200 gallons of fuel every day.

With roughly 30 days of harvesting expected, that single piece of farm equipment could burn approximately 6,000 gallons of diesel during the season.

At around $6 per gallon, 6,000 gallons would cost approximately $36,000.

And that calculation covers only the combine.

Kurtz also needs diesel for tractors and trucks required to keep his farming operation moving.

For farmers like Kurtz, parking the machinery and waiting for cheaper fuel generally isn’t an option. Crops must be harvested when conditions are right, regardless of what diesel costs at the pump.

That means higher fuel expenses ultimately come directly out of the farm’s bottom line.

Farming Costs Were Already Putting Pressure on Producers

Expensive diesel is arriving after many farmers have already faced higher operating expenses.

Fertilizer, agricultural chemicals, seeds, equipment, repairs, financing and other necessities can represent significant costs before a farmer harvests a single acre.

Kurtz said his finances were already tight because of increased fertilizer and chemical expenses.

Now fuel is adding another financial headache.

This combination is especially important for family farms and smaller agricultural operations that may have less room in their budgets to absorb sudden increases.

Why Are Diesel Prices So High?

The surge in diesel prices has developed alongside major disruptions in global energy markets connected to the war involving the United States, Israel and Iran.

Crude oil is the primary raw material used to manufacture diesel and gasoline. When crude oil prices increase sharply, consumers and businesses frequently feel the effects at fuel pumps.

The Strait of Hormuz has become especially important to the current energy situation.

The narrow waterway is one of the world’s most important routes for transporting oil and other energy products. Disruptions involving tanker traffic have increased concerns about global supplies and contributed to volatility in energy markets.

The effects can eventually reach American consumers, trucking companies, manufacturers and farmers.

Higher Fuel Costs Can Ripple Through Rural America

Agriculture doesn’t operate in isolation.

When farmers pay more for diesel, higher transportation and production expenses can ripple through the agricultural economy.

Farmers need trucks to move crops. Agricultural suppliers need transportation to deliver fertilizer, chemicals, equipment and replacement parts. Grain must be transported to storage facilities, processors and other destinations.

Higher energy costs can therefore affect numerous businesses connected to American agriculture.

For rural communities heavily dependent on farming, prolonged increases in agricultural expenses can become an important economic issue.

Cash-Strapped Farms Could Face Difficult Choices

The biggest concern may be for farms already operating with narrow profit margins.

Mitchell said operations struggling with cash flow may have to decide which expenses can be reduced or postponed.

That could potentially include delaying equipment purchases, repairs, maintenance or other farm improvements.

Those decisions become even more difficult during harvest season because many immediate expenses simply cannot be avoided.

Farmers still need to harvest their crops.

They still need to operate machinery.

And they still need to transport what they produce.

The Cost of Harvesting America’s Corn and Soybeans Is Rising

Corn and soybeans are among America’s most important agricultural commodities, making the financial health of the farmers producing them significant to the broader U.S. agricultural economy.

A major increase in diesel prices doesn’t automatically determine whether a farm succeeds or fails. Commodity prices, crop yields, debt, weather, land expenses and numerous other factors also affect profitability.

But rapidly increasing fuel costs can create another substantial expense at a particularly sensitive point in the farming calendar.

A machine consuming 200 gallons of diesel per day becomes considerably more expensive to operate when fuel rises by several dollars per gallon.

Multiply that across tractors, combines and trucks, and the financial impact can become significant.

Farmers Hope Diesel Prices Eventually Come Down

Kurtz said he plans to postpone some farm work in hopes that diesel becomes cheaper later.

It’s one of the few ways producers can attempt to control expenses that are otherwise largely outside their control.

Farmers have always dealt with uncertainty. Weather changes. Commodity markets fluctuate. Equipment breaks. Input costs rise and fall.

Energy prices are now another major variable confronting producers during one of their busiest periods of the year.

For American farmers bringing in corn and soybeans, however, there is little choice when harvest arrives.

The combines have to run, the trucks have to move and the crops have to come out of the fields.

Until diesel prices decline, every trip across those fields carries a substantially higher price tag.