A farm business management coach says the uptick in diesel prices will be noticeable on the farm as harvest continues. Bret Oelke with Innovus Agra tells Brownfield Ag News that a relatively small percentage of the farms he works with have locked in fall fuel prices before the recent increase.
“They have product on hand, don’t get me wrong, but they haven’t locked in a price at values that are significantly lower than where we’re at right now. It’s going to be a bit of a challenge this fall,” he says. “As diesel fuel prices keep going up, we’re going to continue to have that higher direct cost in the harvest cost and then getting to our first market.”
He says farmers have some tools available to manage diesel price risk, but many will still face higher harvest and transportation costs this fall. Oelke says the larger concern is the indirect impact of higher energy prices.
“What is it going to do to my seed cost? What is it going to do to everything else that has to come in and utilize fuel for that? And then, it becomes a compounded problem. A lot of the seed folks I’ve talked to, they’re not changing their pricing structure for this next year, but that may change over time.”
Oelke says planning ahead and locking in input costs early can help farms manage risk as marketplace uncertainty continues.
EDITOR’S TAKE:
The last thing farmers or anyone who uses diesel in their business want are higher prices. Reality is, however, that diesel prices have been climbing steadily since the Iranian conflict began back in April. As the article suggests, this will have a negative impact on farm margins and profitability this fall and likely into the spring planting season. Hopefully the conflict with Iran will end soon and prices will return to a more moderate level sooner than later.
In the meantime, use all the tools we provide to CAD members to help you sell more trucks. AgPack® is a premier program designed to provide real ROI on the farm/ranch truck investment. And don’t overlook the power of financing with CADFI to coordinate payment schedules with income flow.
