Record US Diesel Prices Squeeze Farmers, Could Boost Food Costs
US farmers are facing record-high diesel prices, which could lead to higher food costs for consumers. The average US diesel price hit $6.29 per gallon this week, up 68% from last year's price of $3.74. This increase in fuel costs is squeezing farmers' already thin margins.
Addie Yoder, a corn and soybean farmer in northeast Missouri, runs two combines that each require 300 gallons of diesel fuel. With one combine costing her up to $1,500 per day to fuel, she's trying to cut back on other expenses. Drew Peterson, a soybean and cattle farmer in southeast South Dakota, expects to spend double last year's costs on fuel for just one of his combines.
According to David Ortega, an economist at Michigan State University, higher diesel prices raise costs throughout the food supply chain, from harvesting to freight delivery. The majority of US food is transported by trucks that use diesel fuel.
Farmers have access to off-road diesel, which is not subject to state and federal taxes, but many are still paying significantly more for fuel than last year. Wayne Gularte, a vegetable farmer in California, has seen his fuel costs rise 40% from $5 per gallon to $7 per gallon.
University of Illinois agricultural economist Nick Paulson warned that high fuel prices could lead to inflationary pressures on other farm expenses, such as seed and fertilizer. Jon Paul Driver, a hay farmer in Washington, said that any increase in fuel costs is additional debt for farmers.