WASHINGTON, D.C. (RFD News) — Rising diesel prices are creating another challenge for farmers as harvest picks up, with many transportation providers adding fuel surcharges.
Mike Steenhoek with the Soy Transportation Coalition says higher fuel costs affect both on-farm operations and the cost of moving grain to market.
“That obviously has a significant impact on farmer profitability with the diesel that they have to purchase for their own on-farm usage, but also for their trucks that they use for transporting their soybeans and grain to market. Another way high fuel costs really insert themselves into the industry, and the broader economy, is fuel surcharges. One of the things that we witnessed, so a lot of transportation providers, railroads included, when fuel costs go up, they will institute a fuel surcharge.”
Steenhoek says farmers often carry the burden when diesel prices rise.
“Whether it’s a domestic customer or an international export move? Will it get absorbed by the grain handler or the shipper, or will those costs get passed on to the farmer, the farmers that feed into the system? What is widely acknowledged within the industry and what we’ve seen substantiated with research that we’ve conducted over the years is that those costs are disproportionately passed on to farmers in the form of a lower price or a more negative basis.”
AAA shows diesel at $6.31 per gallon, up from $6.26 yesterday and $5.94 last week. Gasoline has also increased, with the national average at $4.36 per gallon.
Senate Majority Leader John Thune said this week he is open to exploring a ban on diesel exports if it would take pressure off prices.
