Area farmers feel pinch of gas spikes

Summer-long drought conditions are expected to cut production of Missouri’s two largest crops, corn and soybeans, by a third from last year, are putting the state’s farmers in a tight financial spot.

Just ask the businesses that cater to farmers.

Eric Schnelle, vice president of S & H Farm Supply Inc., 2520 N. Eastgate, said the company’s farming customers have to accept market prices for the goods they produce. That means the farmers can’t raise their prices in response to higher production costs.

“All their costs are going up,” Schnelle said, “and so they’re getting squeezed in the middle.”

He said high gas prices have led, in part, to higher prices for other commodities such as steel, fertilizer and hay. Schnelle said the dry summer also cut hay production 50 percent from last year, causing a shortage and, therefore, higher prices.

Jerry Francka, salesperson at Pleasant Hope Farm Supply, 113 N. Main in Pleasant Hope, said 50/50 processed grain feed increased from $8.40 to $8.75 for 100 pounds Oct. 17.

“I suspect it might even go higher,” Francka said.

Rogersville-based milk hauler John Cruise said high gas prices have forced him to charge farmers more for his services.

Cruise said an average dairy farmer pays him $500 a month to pick up milk every other day, a $50 increase from the beginning of the year.

“If I had to eat (higher gas prices),” he said, “I’d be out of business.”

Cruise said he increased his fee because he’s paying twice as much for fuel. He said he bought 1,200 gallons of gas, a month’s supply for his two trucks, for $3,800 Oct. 17.

“The farmer’s the one taking the hit for a lot of this … and I hate that, but I don’t have any choice,” he said.

Steady prices

Retail milk prices have been fairly stable since 2001, according to the U.S. Department of Agriculture’s marketing service Web site.

Department statistics show the average price for a gallon of whole milk in St. Louis in 2001 was $3.15 and is now $3.05 while in 2001 in Kansas City the average price was $2.98 and is now $3.53. In Springfield, a gallon of Hiland Dairy whole milk was $3.23 Oct. 20 at Dillons grocery store at 1707 W. Battlefield.

U.S. House Majority Whip Roy Blunt, R-Missouri, said the government is trying to combat the effects of high gas prices.

“Fuel prices contribute a large part of the cost of producing grain and animal feed, raising livestock and milking cows,” Blunt said. “The result of hurricanes Katrina and Rita was that refineries were damaged and shut down. This impacted the supply of all fuels.”

He said The Gasoline for America’s Security Act, HR 3893, which was passed by the House Oct. 7, helps “move the country one step closer to lowering sky-high prices of all types of gas for consumers.”

The legislation, according to the House Committee on Energy and Commerce Web site, requires the Federal Trade Commission to investigate price gouging and grants the agency the authority to prosecute offenses. The bill also cuts the number of “boutique” fuels currently required for different parts of the country from 17 to six, and encourages carpooling to conserve gasoline.

Boutique fuels are fuel blends that burn cleaner than regular gasoline according to Environmental Protection Agency spokesperson John Millett, who would not comment on the price impact boutique fuels have on consumers.

“Additionally, I formed the Gas Price Task Force with nine other members so we could hit this issue head on,” Blunt said. “Right now, we are talking with every facet of the industry, including oil and gas companies, marketers and producers, and natural gas and heating oil producers to better understand how the items are made and how exploration factors into pricing.”

S&H’s Schnelle said farmers are still buying supplies and machinery, partly because they need more efficient technology and partly because buying new equipment gives them a tax break.

He cited Section 179 of the Jobs and Growth Tax Relief Reconciliation Act of 2003, which allows more than $100,000 in tax write-offs for equipment and supplies for any small business.

“We tell the guys, ‘You can give it to Uncle Sam, or you can invest it in machinery that you need,’” Schnelle said.

[[In-content Ad]]