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Rising input costs continue to squeeze

The price of petroleum continues to place a squeeze on growers throughout the West, but for specialty crops that are often transported by truck to East Coast markets it presents a double dip in the returns of growers, sources said. Long-time Salinas-area Agricultural Consultant John Inman said the price of oil has not only increased production costs for everything from drip tape to fertilizer, but is also putting put pressure on growers who are often absorbing the extra cost of diesel fuel to transport cash crops.

“We’re talking $10 to get a carton of lettuce to the East Coast and that equals our production costs,” Inman said. “Nominally we sell f.o.b., but when freight costs go up buyers try to get that out of the grower, and they are definitely feeling it in their returns.”

Nationally, a new survey by the USDA revealed that the rising cost of fuel and other inputs helped drive U.S. farm production expenditures to a record $260 billion in 2007. That record reflected a nearly 10 percent increase from the previous year and 30 percent increase from five years ago.

The report shows that the average production costs per farm nationally increased 26 percent for fertilizer, 15 percent for fuel and 12 percent for agri-chemicals between 2006 and 2007.

Inman said a group is currently putting together a feasibility study on transporting lettuce and other coastal vegetable crops by rail rather than truck and trailer.

In the meantime, sources in the area say there could be a shift away from leafy greens and cole crops to less traditional Salinas Valley crops given difficulties for growers in recent years. Strawberry acreage continues to expand in the northern coastal area and some reports even mention a return of processing tomatoes to the southern tip of the Salinas Valley as prices rise and acreage drops in the San Joaquin Valley in light of water shortages and high prices for competing commodities.

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