High fuel prices are affecting farmers faced with higher costs for diesel. Gary Huitink, an engineer for the University of Arkansas Cooperative Extension Service, says that in the 1970s, farmers burned 16 gallons of diesel to grow an acre of cotton, excluding irrigation and ginning energy requirements. Today, the diesel requirement has been cut to 5 to 8 gallons. Farmers, however, aren't realizing a savings because they have a narrower margin, considering cotton prices and the cost of other inputs.
To prosper, farmers are managing more acreage than in the past; thus, a row crop farmer is a large diesel user.
“To remain competitive with world cotton producers, local farmers are making changes to increase their productivity,” said Huitink. “The rising fuel costs, though, are making that difficult.”
Huitink said consumers will be affected. The trickle-down effect of high fuel costs over an extended period hasn't fully been reflected in consumer prices. If fuel prices continue to increase, or at least plateau at today's prices, the cost of goods and services will inflate.
“We'll see an increase in the costs for irrigation, drying and ginning as the prices for natural gas and LP gas increase in proportion to the diesel price,” said Huitink.
Meanwhile, the cost of raw steel has risen, possibly influenced by high fuel prices. Huitink said the cost of raw steel has increased 40 percent since January. Since manufacturers are paying more for raw steel, the cost of farm equipment.
Ultimately, it's the consumer who will absorb the increasing fuel costs. Consumers will pay more for automobiles because of raw steel costs. They will also pay more for food and clothing to absorb the increasing costs farmers are incurring.