In North Dakota's diverse economy, agriculture is king; the fate of agriculture relies heavily on fuel and fertilizer costs.
Farmers tend to pre-buy fuel, storing it in on-site tanks for later use; but presales of fuel when prices were at $3 to $4 for a gallon of diesel still has an impact on the bottom line.
"It's probably the single biggest cost item right now,"said Roger Johnson, state agriculture commissioner. "When you talk about its impact to all of agriculture, it's not just the fuel, it's all the supplies."
Fertilizer, directly tied to petroleum prices, has increased three fold. Farmers are changing habits, taking their equipment into fields as little as they can to reduce consumption. But most farmers have already become so efficient that there's little more they can do to reduce consumption.
"Either they farm or they don't farm, that's the alternative, "Johnson said.
He said many have switched crops to less fuel-intensive operations. The increase in pulse crops acreage this year and the decrease in corn, for example; corn tends to require more tillage and more attention, which means more fuel. Which translates into higher prices.
"It was high when they pre-bought it," said ElRoy Haadem, Burleigh County extension agent. "But certainly it wasn't what it was two or three years ago. It's going to have an impact on the bottom line. The price they get for their commodities in their previous years, they're going to have to have a higher price to cover the higher costs."
- Crystal R. Reid
Posted in Local on Saturday, May 24, 2008 7:00 pm Updated: 2:23 pm.
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