“I don’t see how we can continue,” said Bee County farmer Troy Berthold when asked about what $4 farm diesel is doing to him this year.
“It isn’t $4, it’s more than that, and it looks like it’s gonna be $5. And we’re having dry weather. It doesn’t look too good.”
The soaring cost of fuel may mean people canceling vacations and car pooling to work. And businesses may be raising prices to make up for the extra expenses.
But the country’s farmers are stuck. They cannot afford to cancel plowing, fertilizing, weeding and harvesting their crops and they can’t increase the prices for crops when they are determined by market forces beyond their control.
“We’ve had three droughts in the last four years,” Berthold complained. “And last year it wouldn’t quit raining.”
“It’s scary to me more than anything,” he said. “What’s going to happen?”
“My dad said that in the ’50s we had a chance of rain every week to ten days. We had a really good crop until two weeks ago and then we started getting 100-degree days.”
Berthold admitted that the price of grain is good this year but the farmer has to have a crop to realize the price. The country east of Beeville, where Berthold farms his family’s land, has been hit harder than other parts of the county this year by hot, dry weather.
“We’ve had about an inch of rain since January,” he said. With temperatures soaring close to 100 degrees in the last two weeks, he said his grain crops have suffered even more. Berthold is afraid continued hot, dry weather will cause what little grain he has to fall over and become impossible to harvest.
West and south of the city, the situation has been a little better. Farmer Matt Huie said some of his crops have received six inches of rain.
In other areas, though, the situation is worse. Huie has invested in irrigation equipment in some places but water pumped out of the ground is never as good for crops as rain from the sky. And it costs money to run the irrigation equipment.
On land that Huie farms for another man, a 5,000-gallon diesel tank keeps a pump working around the clock. The engine uses 13.5 gallons an hour, 24 hours a day. “So it’s easy to calculate that price tag,” he said.
If the price of grain holds, Huie might make some money this year. The break-even price for corn is about $3.70-$3.80 a bushel.
“But Mother Nature determines the break-even price,” he said.
Farmers are going to have to start harvesting “right around the corner,” he said. Checking his corn, the farmer pointed to the kernels on one ear and said, “It’s starting to dent. That means it’s maturing.”
Huie said the price of hauling grain was at 15 cents a hundred five to seven years ago. “I don’t know if they can do it for 30 cents this year.”
The price of fuel has increased 150 percent in two years. Farmers were complaining just last year at harvest time, wondering how they were going to make any money with farm diesel selling for $2 a gallon.
Berthold said the last time he filled his diesel tanks he paid close to $4 a gallon. Now, he said, the price is anywhere from $4.10 to $4.12 a gallon.
“It’s going to cost $1,000 a day just to harvest this crop.”
Of course, higher fuel prices lead to higher fertilizer prices. So farmers are looking at another big expense as they begin planning for the next crop.
Bee County Agricultural Extension Agent Donnie Montemayor echoed the sentiments of farmers facing the rising production costs and uncertain rainfall this year and he expects to see hay prices rise for ranchers if the weather stays as dry as it has been lately.
Although the price of grain seems likely to remain good this year, most farmers need some rain in the next couple of weeks to make much of a crop.
“The early part of June is when you really need some rain,” Montemayor said. Whether farmers have had enough rain to get through this growing season “just depends on where you are.”
The south end of the county appears as though it is doing better, Montemayor said. But even then, crops need that last little bit of moisture before the harvest begins in a few weeks.
Montemayor agreed that the cost of hauling grain will be up this year. However, he fears many farmers may be surprised to see how hard it is to get someone to take the grain to market.
“A lot of guys are getting out of it,” Montemayor said of the grain freight business. The higher cost of fuel has made it harder for the transport companies to make any money.
“That’s gonna hurt,” he said. “Production costs have already doubled.
The county agent said another problem facing the farming industry is the number of people who are simply getting out of the business. He said he was making up an address list recently of farmers to invite for this year’s crop tour and he was amazed to see how many had left the business.
“There probably aren’t 15-20 full-time row farmers left in the county,” he said. He has no idea what will happen to the industry here. Maybe, Montemayor said, the solution will be for those who remain in the business to expand to bigger operations.
“Farmers look into the futures markets and the futures markets have not been good. The optimism is there but the prices have to be right.”
Berthold wondered the same thing.
“What’s a 20-year-old boy gonna do who’s interested in farming?” he asked. “It’s just pretty tough.”
“Everything goes up every year but how the hell can it go any higher? We can’t pass it down.”
“This country, for a long time, has had cheap fuel and cheap food and we’re in for a correction on that and it’s really gonna hurt,” Huie said. “It’s just gonna be painful. It affects everything you touch. It’s going to be one heck of a cycle.”
Huie said he read recently that the average city in this country has about four days worth of food in its system. “That means we depend that much on freight.”
If the price of corn drops to below $3.50 and there is not a similar drop in the price of energy, we’re all going to be in a serious loss position, Huie added. He said passage of the farm bill Congress prepared this year also is vital. He said President George W. Bush’s complaint about the bill having a lot of pork in it is correct. That pork is going to feed the nation’s lower income people.
When asked if he thought that serious drop in corn prices was likely to happen, Huie was not optimistic. He spends a lot of time reading about economic tends, energy prices and the future of crop prices so Huie believes he has a pretty good idea of what people can expect.
“I think it’s likely that it’ll happen,” Huie said of the possibility of a food crisis in this country. “It’s just a matter of time.”
“While oil prices and more generally energy prices have increased the cost of doing business in agriculture, it’s profitable to farm because of a corresponding rise in commodity prices,” Huie said.
“In South Texas the major factor in profitability this year will be Mother Nature. The risk of farming has also increased in proportion with the price of energy and commodities. The problem with this scenario is that a significant dip in the price of commodities would result in catastrophic losses because break-even prices have risen 100 percent or more.”
“Also,” Huie noted, “current farm policy, which has in the past protected farmers from falling prices, will not do so because break-even prices are above the target prices set up in the farm bill.”
The problem is not the fault of the farmers. Huie said, “We’re doing what we’ve always been doing. Trying to raise as much food as we can.”