Agriculture Boosted By Low Fuel Prices

Rusty orange and gray fuel tanks sit on a covered wooden platform with labels such as "car gas" and "diesel."
Rusty orange and gray fuel tanks sit on a covered wooden platform with labels such as "car gas" and "diesel."
Farm fuel tanks with labels such as “car gas” and “diesel.” Creative commons liscensed image from Eliot Phillips on Flickr.

Phys.org reports on how not everyone is being hurt by lower gas prices. In addition to giving middle-class America a well-deserved break on rising prices, farmers and ranchers are reaping the benefits of low gas prices and finally refilling the fuel tanks they have kept near-empty since prices soared a number of years ago. Farmers have been sticking with lower-maintenance crops to save on fuel are planning on planting more higher expenditure crops such as corn and rice since the cost to cultivate, plant, rear, harvest, and deliver are not eating into their pocket books as deeply as in recent years. Similarly for ranchers, the cost to raise and feed cattle hinges a lot on fuel prices as it takes many farm vehicle hours (tractors, balers, planters, fertilizers, sprayers, trucks, etc) to feed, move, and deliver farm animals as well as to farm the hay, silage, and grains that they consume. [quote align=”right” width=”40%”]”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.”[/quote]

High gas prices and low crop prices in recent years have eroded profit margins for farmers and have lead to price increases at the supermarkets. Even though consumers won’t see lower food prices it will likely mean the price increases may slow in the midterm. It’s also noted that transportation cost only contributes a small percent to food prices. Much of the cost comes from the cost of recent natural disasters such as droughts, frost, and flooding that occurred in farm areas. Disasters and market price fluctuations along with production costs (which include fuel used on the farm) make up the bulk of the cost of food.