Published on 03/28/00

Fuel Prices Running Up Farm Bills

Georgia farmers are facing fuel prices at least 50 percent higher than last summer. If prices continue to rise, University of Georgia experts say farm fuel costs could top $200 million this year.

"Fuel and electricity have totaled less than 10 percent of farm expenses in the past. But they constitute a sizable expenditure for growers of crops," said Bill Givan, a UGA Extension Service economist.

"In 1998, Georgia farmers spent a little more than $124 million for petroleum fuel and oil," Givan said. "Electricity costs were another $62.3 million."

Fuel Costs Painfully High

The '98 numbers are the most recent available, but Givan figures fuel costs for '99 were comparable. This year, though, they're far higher -- painfully so for farmers.

"We estimate that 20 percent to 25 percent of the total energy consumed on the farm supports animal production (primarily broilers)," he said. "That means the other 75 percent to 80 percent of the fuel cost ($93 million to $99 million) is used to grow the state's 4.15 million acres of crops."

At prices 50 percent higher, the fuel costs of producing Georgia crops will climb by $62 million to $186 million. If prices keep climbing, fuel costs could top $200 million.

Cotton will be most affected by the rising costs, due to the large number of acres planted. Tobacco will be hit hardest on a per-acre basis, due to the high cost of curing the leaves.

"We could see fuel costs double to $8.34 million for cotton, $3.40 million for peanuts and $3.77 million for tobacco," Givan said.

Price Tag Raised $20 Million

In Georgia's main crops (cotton, peanuts, tobacco, corn, soybeans, hay and vegetables) alone, farmers' fuel costs could be $20 million higher.

"There are still more costs to be considered," Givan said, "that we haven't measured in these figures. These costs include fuel costs for drying crops, ginning cotton and harvesting vegetables."

Dry fields mean Georgia growers will have to use more irrigation. That will use even more high-priced fuel.

A 1998 survey shows 1.4 million acres of Georgia farmland were irrigated, using 12,833 systems. Of this number, 68 percent were either diesel-, gasoline- or LP gas-powered. The others ran on electricity.

"The most recent irrigation fuel cost estimate is $3 per acre-inch using 1999 fuel prices," Givan said. "The higher prices increase that by at least $1.50 per (inch of water applied per acre)."

If petroleum-based fuels power 68 percent of the irrigated land (973,000 acres), then added costs of higher fuel prices would equal $5.8 million for every 4 inches of water applied per acre. That would be $11.7 million for the eight applications required in a typical dry year.

"Agriculture is both a capital- and fuel-intensive industry," Givan said. "Fortunately, capital costs have been relatively low in recent years -- as have fuel prices.

"But the current fuel-price structure shows the industry's vulnerability to higher input costs," he said. "That's especially true when these costs cannot be passed along."

Expect the state's farmers to look for ways to reduce the number of trips across the field this year, Givan said.

"If 2000 is a dry year, as is being predicted," he said, "then we'll see still higher production costs. That is, if irrigation water is even available."

Estimated Fuel Use for Selected Crops and

Added Costs of 50% Higher Fuel Prices, Georgia, 2000*

Current Costs Added Costs for Year 2000
Crop Fuel Use/Acre Fuel Cost/Unit 1999Acres Per Unit Totals
Cotton 13.35 gal. $0.02/lb. 1,470,000 $0.01/lb. $8,340,300
Peanuts 14.6 gal. $10/ton 548,000 $4.96/ton $3,400,300
Tobacco 267 gal. $0.11/lb. 33,000 $0.05/lb. $3,774,700
Corn 6.8 gal. $0.08/bu. 350,000 $0.04/bu. $981,800
Soybeans 6.8 gal. $0.20/bu. 220,000 $0.10/bu. $635,800
Hay (4 cuttings) 9.8 gal. -- 600,000 -- $2,499,000
Vegetables (land prep.) 4.5 gal -- 120,000 -- $229.500
*Costs for nonirrigated crops

Faith Peppers is the director of public affairs with the University of Georgia College of Agricultural and Environmental Sciences.