Diesel prices are likely to stay high for at least the next year, squeezing farm margins and eventually consumers, says Gregg Ibendahl, a farm management specialist with Kansas State University Extension. Diesel is about $2.25 a gallon higher than earlier this year.

Higher crude, up from the low-to-mid $70s to more than $100 a barrel, explains about 70 cents of that, Ibendahl said; the rest reflects a global diesel shortage. Russian exports have fallen after drone damage to refineries, flows through the Gulf and the Strait of Hormuz are curtailed, US refineries are running at about 98 percent of capacity, and about 30 percent of US diesel is being exported.

"Farmers are price takers," he said. A north-central Kansas corn budget assumes about four gallons of diesel an acre, so the increase adds around $10 an acre: "For a farmer working 2,000 acres, that's an extra $20,000." Fertiliser and seed still cost most farms more than fuel, he added.

Photo: Bill Whittaker / Wikimedia Commons (CC BY-SA 3.0)

Source: The Fence Post