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Cost of diesel impacts farmers

Tuesday, July 15, 2008

By Leonna Heuring


SIKESTON -- Record-high diesel prices have doubled -- and in some cases tripled -- the costs of farming over the past year, leaving farmers and other big consumers of energy looking at ways to save money.

Fred Ferrell, president of Mid Valley Irrigation Inc. in Charleston, said the agriculture industry is a significant user of energy, and in particular, diesel.

"Besides being used to power irrigation, diesel fills large trucks to haul grain to the elevator. It's used to fill up a combine, a tractor or cotton picker," said Ferrell, who is also a farmer. "Fuel has always been a major cost to farmers, but it has accelerated."

On Monday, the national average price of diesel reached another record-high at $4.82 per gallon, according to AAA auto club, the Oil Price Information Service and Wright Express. In Missouri, the average price was $4.65.

Since most people don't buy diesel to run their vehicles, they don't see the direct effects at the pump, Ferrell said. Instead, the higher prices have had a more subtle impact -- and one that's being felt by consumers.

"Everything that is hauled is hauled by diesel. The high price of diesel is being felt now (by consumers) as greatly as the fuel we put in our car," Ferrell said.

"I really don't know how people are farming with the cost (of diesel) increased so much," said Joe Henggeler, state extension irrigation specialist for Missouri Delta Center in Portageville.

However, the hope is that farmers can keep ahead of the cost increase, Henggeller said.

Henggeler said university extension officials and farmers are working on ways to minimize costs of irrigation.

"In regard to pumping costs, right now electricity is the cheapest and diesel and propane are about the same," Henggeler said.

Only about 13 percent of Missouri's irrigation pumps are driven by natural gas but this could definitely be an option because there are natural gas lines around here, Henggeler said.

"If they have natural gas lines, a person could tap into those," Henggeler said.

Farmers realize electricity is the cheapest way to run irrigation, but many of them are at point where they can't do it just yet, Henggeler noted. For example, maybe they can't make the switch because they've just invested their money in another piece of equipment, he said.

Glen Cantrell, communications manager for SEMO Electric Cooperative, said the electricity provider has received a large influx of phone calls this year from people inquiring about hooking up electricity to their irrigation pivots.

"We've seen a 5 percent increase from last year of farmers who are using electric for irrigation as opposed to diesel powered generators," Cantrell said. And there are the phone calls inquiring about looking into changing to electricity this year and next, he said.

Ferrell said since winter there's been a definite upsurge in farmers switching from fossil fuels to electricity to run their irrigation pivots.

The price of fuel is a little unsettling everyone, Ferrell noted.

"We use so much of it agriculturally, and we have not found ways on the farm to offset it," Ferrell said.

Big trucks get 12 to 15 miles per gallon, and larger vehicles must be used to transport big tools and pull trailers, Ferrell said. "Farmers are not able to have a 40-mile-per-gallon truck that we can tool around here," he said.

However, David Reinbott, economist for Scott County University of Missouri Extension, said some farmers are using smaller trucks for smaller tasks.

"I've noticed some farmers have sort of parked their pickups. Some are driving cars to get a part or go to the bank," Reinbott said. "I'm sure guys are also looking at trying to reduce trips in the field."

Reinbott said it's difficult to say what the future holds regarding diesel prices, but he said there are three reasons why prices increase.

"One reason is to try to increase the supply," Reinbott said. "The second is to reduce the demand or use, and the third reason is to bring about alternatives. ... Sometimes that's a slow process."

Area farm diesel supplies mostly left alone

SIKESTON -- Despite the soaring prices, local law enforcement officials say farm diesel supplies, for the most part, haven't been tampered with this summer.

New Madrid County Sheriff Terry Stevens said no reports were made of farm diesel supply thefts.

Scott County Sheriff Rick Walter said there was one diesel theft this year in Oran.

"Right now we've been fortunate as far as any kind of gas or diesel thefts. We're doing extra patrols at night," Walter said.

To ensure a diesel supply's safety, Walter recommended leaving the area well-lit. Although it's an added expense, some local farmers have added motion lights near their their supplies.

"Be vigilant of your property and your neighbor's property. Around here, they do watch out for each other," Walter said, adding if anyone sees anything suspicious regarding farm diesel supply thefts to report to the local law enforcement agency.

Diesel designated for non-highway purposes costs about 60 cents less per gallon and contains a red dye that distinguishes if from regular diesel fuel.

Red-dye diesel can be used in agricultural equipment, such as tractors or combines, and on farms or ranches. A home garden doesn't qualify.

The Internal Revenue Service does random, periodic checks for illegal use of red-dyed diesel at weigh stations across the country, spokesman Clay Sanford said. The federal penalty for using the off-highway diesel on public roads is the greater of $1,000 or $10 per gallon of the fuel involved. Penalties increase after the first violation.

The Associated Press contributed to this story.