Fuel Prices & Farmers
AFB Chief Economist Robert Cryan says the cost of growing food is soaring, with no end in sight …
CRYAN … “At the retail level, gasoline is up 50% from a year ago and fuel oil is up 100% from a year ago, quite the high-cost increase for farmers.”
Cryan says the strengthening demand in our post COVID world and the massive market disruptions caused by the war in
Ukraine are causing these record fuel prices. But on the production side …
CRYAN … “There have been some disruptions to U.S. refining capacity, which affects the market, we also need to see some increases in production if we’re going to make up the gap, resulting from the Russian shortfalls.”
So, can farmers still make a profit? …
CRYAN … “Farm prices are up for crops, but for crop farmers, those have been really cut into by higher fuel and fertilizer costs. Livestock, animal products, some of those prices are up, but those prices have been undercut, in terms of profitability, by rising crop prices, as well as fuel and fertilizer prices.”
Fuel prices could still come down, but experts say the US must boost domestic oil production and expand refining capacity, both of which require investment and regulatory flexibility lacking right now.
Hurricane season could also hurt production squeezing tight supplies even more as the summer driving season kicks into gear.