Record-high fuel prices squeeze farmers

FREDERICK, Md. (Map, News) - Soaring crude oil and natural gas prices are squeezing farmers, who say their costs for diesel fuel and fertilizer are skyrocketing as spring planting begins.

Diesel prices averaged a record $4.168 a gallon nationally Friday, more than triple the year-ago price for a fuel widely used to power farm implements.

U.S. prices for natural gas, a major component in the production of the nitrogen fertilizer anhydrous ammonia, have nearly a doubled since late August, boosting field-preparation costs.

"Because of the rising costs of inorganic fertilizers, many farmers in Maryland's farm belt and the region are now turning to alternatives, such as manure, but there is little they can do about record diesel prices," said Brian Clark, a University of Maryland Cooperative Extension agent in Clinton.

Chuck Fry, a Frederick County turkey and dairy farmer, said it costs him $120 to $140 to refuel his diesel-powered poultry litter spreader, up from $30 to $40 last year. The increase has made him use his large implements more judiciously, Fry told The Frederick News-Post.

Ragina C. Averella, a spokeswoman for AAA Mid-Atlantic, said farmers also are dealing with higher livestock feed costs.

All the increased production costs, plus the higher cost of transporting farm goods to market on diesel-powered trucks, are ultimately passed on to consumers, she said.

"It is a horrible cycle that translates to higher transportation costs to the marketplace and still higher prices for the eggs, milk, fruits, vegetables and other consumables," Averella said. "All of this while we all continue to grapple with higher pump prices, too."

According to the American Farm Bureau Federation's Marketbasket Survey, retail food prices rose about 9 percent in the first quarter of 2008.

Historically, diesel fuel was cheaper than gasoline because it was easier to refine, according to industry researchers. Since the Environmental Protection Agency issued mandates in September 2004 requiring major reductions in the sulfur content of diesel fuels to improve air quality, the price generally has been higher than that of regular gasoline, according to the Energy Information Administration.

"There seems to be no end in sight for the misery on the farm," Averella said. "According to forecasts by the EIA, retail diesel fuel prices are likely to remain elevated as long as crude oil prices and world demand for distillate fuels remain high."

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Information from: The Frederick (Md.) News-Post, http://www.fredericknewspost.com

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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