Farmers feel pinch of high fuel prices now, consumers may later
by Olivia Munoz

Associated Press

The high price of fuel that powers irrigation equipment, tractors and trucks hauling produce to market is taking a toll on California farmers, and it’s only a matter of time before the pain is passed on to consumers.

“It’ll take a couple months to get through the system, but you’ll feel it,” said Stephanie Williams, a spokeswoman for the 24,000‑member California Trucking Association. “It’s going to feel like you need to take out a small loan to buy groceries.”

In California, the nation’s richest agricultural state, farmers use more than 1.5 million gallons of diesel a day at the peak of harvest. The average retail price for a gallon of diesel was $3.26 on May 10, up from $2.44 around the same time last year, according to the California Energy Commission.

A wet winter and spring storms kept growers out of the fields, but now that the weather has turned warm and dry, their work has accelerated.

Farmers use fuel for their tractors and the trucks that take their produce to the world. Some of them own their own fleets but others pay contract truckers. But fuel prices also affect other machinery, as some growers have their own processing plants.

Plus, rates for fertilizer, much of which is made by combining nitrogen with the hydrogen in natural gas, have jumped by about 25 percent this year from the last, bringing farmers’ fuel and fertilizer costs to $7 million, according to Terry Francl, senior economist with the American Farm Bureau Federation, a Washington‑based group representing farm interests.

Still, if prices go up at your local supermarket, it’s because of what happens between the fields and the shelves. Every day, farmers load up their crops and transport them everywhere from the local farmers’ market to overseas. Fuel is needed for the trucks and planes that carry thousands of California‑grown fruits, nuts and vegetables across state and country lines.

Today, it costs a typical big rig with two 150‑gallon tanks about $975 to fuel up compared to about $730 a year ago.

“This is an interstate industry,” Williams said. “Farmers have to move their products, especially now that we operate in a global economy where you can buy fruits and vegetables from other countries pretty cheap.”

Because retailers estimate that produce transportation doesn’t make up a major portion of their budget–only about four percent–major chains can withstand small spikes in fuel costs, said Dave Heylen, spokesman for the California Grocers Association, which represents about 500 companies.

But a sustained increase will eventually be passed on to the buyer.

“A retailer will try to hold the line as best as he can. But if the prices go higher and higher over the long term, it could impact their overall cost,” Heylen said.

“Are the costs passed on? Sure. Everyone along the line pays their share,” said Michael Wootton, a spokesman for Sunkist Growers Inc.

But farmers aren’t reaping any of the benefits when grocers do increase prices. Their profits remain the same, regardless of transportation costs, Francl said.

“Farmers get about 22 cents per dollar from what people buy at the store,” he said.

Fuel prices also affect those working with the growers, such as the pilots who fly crop dusters. Their fuel has jumped from $1.20 a gallon to as much as $3, increasing the cost to farmers about 5 percent.

Farmer Ted Sheely, 52, of Lemoore, said he invested in better technology to get more precision when farming his cotton, tomato, garlic, and onion fields.

His tractor and fertilizer application machine is hooked up with a GPS reader. The technology keeps him from wasting petroleum‑based fertilizer on areas he knows won’t produce much and keeps the tractor from overlapping so that it makes fewer rounds. They may seem like minor details, but Sheely said he saves about 25 percent in costs each year.

“You can’t afford to waste any time or money in this business,” he said.