Agriculture + Lifestyle

High Fuel Prices Squeeze Farms and Ranches

Posted on July 1, 2022 12:00 AM

High Fuel Prices Squeeze Farms and Ranches


The American Farm Bureau released an article recently explaining how rising fuel prices are affecting farmers and ranchers. Farmers and ranchers are feeling the pressure as they battle the increasing costs of growing food and fiber. In fact, the USDA estimates that the cost of fuel, lube and electricity will increase 34% this year alone. American Farm Bureau Federation economists analyze the factors contributing to rising fuel prices in the latest Market Intel.

So why is this happening? Why the rise in costs? U.S. domestic production of oil is down, the war in Ukraine has reduced the availability of global crude oil and all the while demand is increasing in the United States and abroad. Diesel prices rose to $5.718 per gallon in June, up $2.432 per gallon, or 74%, compared to $3.286 per gallon in June 2021. The current high price of diesel is more than two times the price paid before 2020.  

“While some farmers are seeing increases in commodity prices, their gains are being eaten up by higher expenses,” said AFBF President Zippy Duvall. “Many farmers and ranchers are concerned they won’t be able to break even, much less make a profit. It’s not just on-farm costs taking a toll. High diesel and gasoline prices, among other increased costs, all affect the food supply chain, starting at the farm and continuing to the grocery store, which means all families are ultimately paying more to put food on their tables.”

For prices to potentially begin to decline, the U.S. must increase domestic production and expand refining capacity. Adding to the pressure is the current hurricane season. Farmers and ranchers, no doubt will be watching the forecasts as tropical systems begin to form in the Atlantic Ocean. If a storm was to form, that severe weather could impact production if refineries or offshore sites are struck with a passing storm system.


Content provided by American Farm Bureau Federation