ANKENY, IOWA (RFD-TV) — Rising diesel prices are changing the cost of moving grain to market, prompting farmers to reconsider whether hauling crops to a distant buyer for a higher price still makes financial sense.
Mike Steenhoek, executive director of the Soy Transportation Coalition, said farmers typically weigh local grain prices against offers from more distant buyers. Higher fuel costs can change which option delivers the best return.
“When all of a sudden diesel fuel goes from roughly $3.50 a gallon, which it was last year, to $6.30 a gallon, which it is this year, all of a sudden that change has an impact on the calculations,” Steenhoek said.
Higher Hauling Costs Affect Profitability
Steenhoek said farmers may have several options for selling their grain, including a local elevator about 10 miles away or a processor 50 miles away.
A more distant buyer may offer a higher price, but the additional revenue must cover the cost of hauling the grain.
He said a producer might receive $12.15 per bushel from a distant buyer compared with $12 per bushel locally. When fuel and other transportation expenses increase, the local option may become more profitable.
“The goal is not to maximize revenue. The goal is to maximize profit,” Steenhoek said.
He encouraged producers to calculate their transportation expenses before deciding where to deliver grain.
Online Calculator Helps Compare Delivery Options
The Soy Transportation Coalition offers an online calculator designed to help farmers determine the most profitable delivery location.
Available at SoyTransportation.org/calculator, the tool allows producers to compare local and distant markets using factors such as fuel costs, delivery distance, labor, vehicle maintenance, and the price offered at each location.
Steenhoek said farmers can enter information for both delivery options and compare the resulting profit per load.
The calculator also accounts for the return trip, helping producers evaluate full transportation costs rather than only the price offered by a buyer.
He said the tool can help farmers determine whether a higher price at a distant location justifies the additional expense.
USDA Fuel Relief Offers Some Assistance
Steenhoek said USDA’s $8 billion Harvest Fuel Relief program should provide some needed assistance as farmers face higher fuel costs.
“A billion dollars is not an insignificant amount of money,” Steenhoek said. “It’s going to be providing some needed relief to farmers.”
However, he said direct payments do not replace the need for strong markets and reliable demand for agricultural products.
“I don’t know of a single farmer that got into the business and remains in this business in order to receive revenue from the federal government,” he said.
Steenhoek said farmers ultimately want to produce food for domestic and international markets and meet demand for nutrition and protein.
LEARN MORE: www.soytransportation.org/calculator
