2015 Logan County Farm Outlook Magazine Lincoln Daily News.com March 26, 2015 39
Will lower
costs make farming
profitable in 2015?
O
n the farm every cent matters. This
year, we are seeing falling fuel
prices, and to a certain extent those
prices will benefit the Logan County Farmer,
but perhaps not in the most obvious of ways.
Right now, gasoline and diesel prices are a
dollar or more per gallon below the fall of
2014. Obviously this has to be of benefit to
the farmer in running tractors and combines
at planting time. But, on the whole, fuel
costs are just a small percentage of the big
picture on the farm.
Liquid petroleum prices in 2013 were
insanely high, and thankfully those prices
dropped back to a more reasonable range in
2014 making for less expense incurred when
drying grain. But, was this really a reduction
in cost, or was 2013 an escalation of costs?
Most farmers would consider it an escalation
that made the pain of a poor crop even all
that harder to bear.
According to University of Illinois Extension
Ag Economist Gary Schnitkey, fuel burned
in tractors, trucks, and combines, does not
equate to a high enough percentage of the
total cost of production to make much of a
difference.
In an issue of Farmdoc magazine Schnitkey
spelled it out more completely. “Fuel and
lube costs in 2013 were $24 per acre for
growing corn on high-productivity farmland
in central Illinois. Fuel and lube accounted
for 4% of the $615 of non-land costs
associated with corn production.
Current crude oil prices are roughly at the
same level as occurred in 2010. In 2010, fuel
costs for corn equaled $17 per acre. If 2015
fuel costs equal 2010 costs, an $8 per acre
reduction will occur in fuel and lube costs.
Overall, that would reduce non-land costs by
1.3%.”
However, lower fuel prices can affect the
cost of fertilizers and chemicals in the future.
In an article published in Agriculture.com
Schnitkey noted, “Declines in fuel costs
could lower other production costs, such as
fertilizer and seed. If there is an impact, these
costs likely have a lagged relationship to fuel
costs. As a result, crude oil price decreases
likely will be felt not in 2015, but in 2016
and years thereafter if price decreases
persist.”
Continued to page 40
