April
28, 2006
First, they were
pelted with record rains; now California farmers are getting hammered by
prices at the pump.
Diesel fuel prices have taken a hefty jump in the past few months as crude oil
prices have hit record levels. The news, on top of weeks of wet weather that
stalled spring planting, is discouraging to California farmers like Chris
Johnson of Willows.
“I called our local jobber and he said that in Glenn County, prices had come
up between 38 cents and 40 cents a gallon in the past two months,” Johnson
said. “Of course, we have planting delays, which hurt yield and that is part
of a farmer’s everyday business, but farmers usually don’t have enough
storage for diesel to start at the beginning of planting season and go all the
way through.”
Johnson would normally have started working his 560 acres of rice ground to
plant the 2006 crop, but he has been idled by soggy soil. He said a neighbor
tried to plow a rice field after a break in the weather, “but his tractor
got stuck and it hasn’t moved since.”
A 20 percent increase in his fuel bill from just two months ago, combined with
planting delays, have prompted Johnson to investigate no-till rice on some of
his land. But he said no-till comes with risk as it is still somewhat
experimental.
“We have a contract to grow rice variety M-401, which pays a small premium,
but the recommended planting deadline is May 5, but we have had good luck
planting until May 9th or 10th, but after that your yields really drop off
with this variety,” Johnson said. “Our fuel costs are up, our yields will
likely be lower and with the wet weather, we haven’t turned a wheel yet on a
plow.”
In the San Joaquin Valley, fuel shock is settling in for farmers who are still
planting crops that should have been in the ground weeks ago. Rick
Blankenship, vice president of farming operations for Wolfe Enterprises in
Huron, said diesel prices of $2.50 a gallon are a huge concern.
“In our case, the impact is immediate. We do have several thousands of
gallons of storage, but when we get going, we’ll burn roughly a load a
day,” Blankenship said. “You’re at the mercy of whatever the price
is.”
Last year, despite using about 100,000 fewer gallons of diesel by September,
Blankenship said the farm’s fuel bill was $250,000 over budget. Wolfe
Enterprises has concluded cotton planting, but it will be planting processing
tomatoes through May and higher fuel costs are a big concern.
“We base it on 100 horsepower and for every 100 horsepower, we burn about
two-and-a half to three gallons of diesel per hour so obviously when you get
up to 300- and 400-horsepower pieces of equipment, you’ll have three times
that,” Blankenship said. “When you go back years ago when diesel was 56
cents a gallon and now you’re paying $2.50, it is a huge hit.”
Blankenship said farmers look for ways to conserve where they can. Wolfe has
installed new, cleaner-burning diesel engines as boosters for the farm’s
sprinkler and drip irrigation systems, but the farm also makes more efficient
use of tractors.
“Probably the single biggest factor is that we are doing multiple jobs with
one pass of the tractor,” Blankenship said. “We are trying to be at the
forefront of that and we simply have to make efficient cuts to conserve where
we can.”
Fuel shock is not limited to farmers. Aerial applicators like Bill Porter of
Farm Air Flying Service in Pleasant Grove are feeling the pinch of aviation
fuel hikes. His planes have been busy applying fungicides to wheat, beans and
orchard crops in the Sacramento Valley, and his fuel costs have tripled in
three years.
“In May 2003, they averaged about 85 cents a gallon. In 2004, it was about
$1.45 and last year it was about $2 and the quotes I just got are for
$2.34,” Porter said. “It has everyone wound up and particularly when the
prices for the commodities that we are growing are either the same or are
going down.”
The California Energy Commission, which tracks supplies and prices, reported
that diesel fuel inventories are actually higher than a year ago, but demand
has remained strong, about 4 percent above a year ago.
Commission spokesman Rob Schlichting said surging crude oil prices are to
blame.
“Crude oil prices are fueling the increases. It is a supply and demand
situation,” Schlichting said. “We have added diesel production, but it is
barely keeping up with demand. We have diesel supplies right now that are 24
percent better than they were this time last year, but that may be more of a
function of the fact that we have had a lot of rain and a lot of farmers have
not been able to get out into fields.”
Schlichting said the average statewide rack diesel price hit $2.22 a gallon on
April 17, a 45-cent increase from a year ago. He added that Alaska North Slope
crude oil, which comprises 21 percent of the state’s crude supply, hit a
record $68.60 a barrel in mid-April, surging more than $21 from a year ago.
Bob Krauter is the Capital Press California editor based in Sacramento. Reach
him via e-mail at bkrauter@capitalpress.com.
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