Fueled by oil, agriculture sector welcomes low diesel prices

25 Jan 2015 | Author: | No comments yet »

AP NewsThe recent plunge in fuel prices has been a welcome relief across the agricultural sector, helping ease the pain of low grain prices for growers and boosting profits for cattle ranchers. And with average retail gas prices for 2015 forecast to be about $1 lower than last year, farmers this spring may end up planting more energy-intensive crops, such as corn or rice, as the cost to irrigate and cultivate drops. Shoppers should not anticipate to see lower costs at the supermarket, for the reason that transportation fees constitute only a small slice of these costs. But with the local price of untaxed diesel and regular gasoline both below $2 a gallon, Cree plans to completely fill the two 300-gallon and one 200-gallon tanks.

Each time he harvests his hay, his tractor must make three trips over every field — one to mow it, one to rake it, and another to bale it. “We are hoping that for the first time in a long, long time to have the burden of high fuel prices off our backs — so we can maybe make a little bit of money this year,” Cree said. Lower energy prices increase planted acres for most major row crops and drop the price of the commodity, according to an April 2014 federal study on the impact crude oil prices have on agriculture.

Nearly 20 percent of operating costs for major U.S. row crops are tied to direct energy expenses, the Economic Research Service’s study showed. “On one level, fuel going down is really going to save us $20,000 to $25,000 — which is a nice chunk of change,” Ehmke said. “However, the other side of the coin is that while we have had a collapse in the oil market, we also have had a collapse in the grain market.” Consumers can expect to use some of their savings at the pump toward grocery bills. The price tag of meals at both restaurants and grocery stores is predicted to go up 2 to 3 % in 2015, according to agricultural economist Annemarie Kuhns with the Agriculture Department’s Economic Study Service. Roth figures he buys about 5,000 gallons of diesel fuel a week, which he mainly uses in his tractors for land preparation, planting, cultivation, spraying and harvest at his farm in Palm Beach County. Any fuel savings will go toward the bottom line, he said, and will help keep his farm fully staffed with 25 full-time employees and 150 seasonal workers. “One of the things that is really interesting about vegetable production is that you have years that you make money, and you have years that you lose money,” he said. “Probably 25 percent of overall cost is related to fuel. I think what it will mean is you will just have people staying in production.” For more news and stories, join us on Facebook,Twitter and Subcripe our Youtube Channel,Or contact us through our Emails : info@diplomat.so,adv@diplomat.so,diplomatnewsdesk@gmail.com

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