06/20/05 Energy costs and ag

In the last year, ag producers have had their share of concerns pertaining to the energy equation of farm inputs & in other words, how much it costs to create the final commodity or product that we as consumers enjoy. After all, with both rising gasoline prices, and natural gas costs boosting fertilizer prices to record numbers, growers and ranchers should have a reason to be concerned. One person who has looked into the numbers on a national basis is economist John Miranowski. And as expected, if you were to pick the most expensive energy input going into this year's production season, it would come from fertilizers created in part by natural gas. MIRANOWSKI: Right now to establish the baseline, twenty-eight per cent of the energy that we're using is going into fertilizer and agriculture, and that's primarily in nitrogen although some into phosphorous not much into potassium in the process. Diesel accounts for about twenty-seven, electricity about twenty-one per cent, gasoline about ten, pesticides about six, l.p. gas five, and natural gas four. But Miranowski says the direct energy costs per commodity aren't as high as other inputs such as fuels and fertilizers. MIRANOWSKI: If you look at corn, about six per cent of the energy goes into direct energy expenses, soybeans is about five percent, cotton is about five per cent, wheat is about seven per cent and rice is about eight per cent. So Northwest, and national, wheat growers are among the producers with the highest direct energy input costs. But if you look at the Northwest ag industry as a whole, Miranowski says many of our top crops, specialty crops, have very low energy costs associated with them, making our region one of the more energy efficient ag producers in the nation. MIRANOWSKI: We're looking about three per cent for trees and nuts, and about three per cent for vegetables, three per cent for nurseries. So I think we can conclude, there's a pretty small share going into direct energy consumption in these crops. Even in meat production, direct energy costs, especially in commodities connected to the Northwest, are not as high as might be believed. MIRANOWSKI: In livestock production, hogs end up about three per cent, poultry about eight per cent, dairy about three per cent, and beef cattle about four per cent. And Miranowski adds the Northwest's relatively small direct energy costs for ag production should decrease in coming years as more farms, ranches, and production facilities move towards integrated farm systems & systems producing ethanol, methane, and bio-based fuels &to meet energy needs.