A new surge in oil prices will hit farmers right in the bottom line. New estimates suggest a $90-per-barrel market, which could significantly raise production costs across the board.
Kansas State University economist Gregg Ibendahl said higher oil prices are already creating a ripple effect through key farm inputs like diesel fuel and fertilizer.
“$90 oil would add more than a dollar per gallon to the fuel costs, and that could easily mean another $10,000 per year in total fuel expenses,” he said. “The average Kansas grain farm spent about $20,000 on fuel last year, and that means even a moderate increase can hit budgets hard.”
Fertilizer prices are just as big a concern because they’re closely tied to the energy markets.
The study showed rising oil prices could push fertilizer expenses up by ten percent.
For the average grain farm, that translates into roughly $12,000 in additional costs.
