For Lance Vanbeselaere, it is hard not to wince each time he gets a fuel bill. Purple diesel prices are almost double what they were six years ago and the hike in gasoline prices has been almost as staggering.
“It’s really significant when you get down to the bottom line of what farmers are making in net income,” said Vanbeselaere, who farms near Waskada, Man.
“Anything you shave off that has a big impact.”
Keystone Agricultural Producers, Manitoba’s general farm group, conducted a survey this spring to gauge the extent of cost increases to farmers in that province. In the results released earlier this spring, it calculated that purple gasoline costs had jumped 84 percent since 1999 while purple diesel costs almost doubled.
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That affects not only the expense of fueling up a tractor, but also the cost of fertilizer, pesticides and farm machinery parts.
“When you translate that into the bottom line, I would say the average farmer is being pegged for a $5,000-$10,000 bill in added fuel costs,” said Vanbeselaere, who at this time of year is in his fields spraying for weeds.
But farmers who wince at current fuel costs may have even greater worries in a few years, if analyst predictions hold true.
Some predict the price for a barrel of oil, which affects gas and diesel costs, could top $100 US by 2010. Last week, oil cost almost $60 a barrel.
“Basically we are looking for further increases in the price of oil over the next three or four years,” said Peter Buchanan, a senior analyst with CIBC World Markets Inc.
He said the world is not running out of oil, but the reserves that remain, such as those in Alberta’s tar sands, are harder to extract. Meanwhile, global oil consumption continues to climb, largely because of the burst of economic development in China.
“Their oil demand will continue to grow strongly for years if not decades to come,” Buchanan said.
Many prairie farmers have already embraced reduced or zero tillage as a way to cut back on fuel costs while also conserving soil and moisture. And there is now growing interest in biodiesel, which can use crops such as canola as an ingredient.
Looking for an upside to the prospect of $100 a barrel oil, Agricultural Producers Association of Saskatchewan president Terry Hildebrandt said it would add further incentive to pursue alternative energies, such as biodiesel and ethanol.
Farmers could benefit as those alternatives become more appealing to the motoring public.
“We’re growing food for very little to no income,” Hildebrandt said. “Maybe we can grow energy at a cheaper rate than fossil fuel and people can pay for that and save a little money and we’d have a potential money making industry.”
In the meantime, Hildebrandt wants the Saskatchewan government to do something to help take the sting out of rising farm fuel prices. APAS has been lobbying for a fuel price rebate, but has not yet swayed the government.
He said gasoline and diesel present a huge cost to farmers, especially “in a world where there is no margin to begin with.”
According to the Saskatchewan crop planning guide, the average fuel cost associated with growing an acre of spring wheat on fallow ground this year will be $10.03, compared to $6.97 per acre five years ago.
