Energy-Cost Jump Hijacks Farmers' Profits

Energy costs could cost farmers more than $6 million in added expenses for the 2003 through 2004 growing season. Compiled by staff

Published on: Sep 22, 2004

Higher energy prices, partly prompted by a disjointed U.S. energy policy, are cutting deeply into U.S. farmers' and ranchers' wallets.

That's according to American Farm Bureau Federation (AFBF) leaders testifying today before a House small business subcommittee.

Speaking for AFBF, Missouri farmer Hal Swaney says increased energy prices during the 2003- 2004 growing season have cost farmers more than $6 billion in added expenses.

"It is essential that we have access to reliable and affordable energy inputs, including gasoline, diesel, electricity and natural gas," says Swaney, a member of the Missouri Farm Bureau board of directors and owner-operator of a beef, row crop and tobacco farm.

Natural gas is particularly important to agriculture because it's the base stock for producing a range of farm inputs, including nitrogen fertilizers and crop protectants, as well as electricity for lighting, heating, irrigation and grain drying, Swaney says.

"Natural gas accounts for nearly 90% of the cost of nitrogen fertilizer," Swaney says. He also told subcommittee members that his cost for purchasing nitrogen-based fertilizer jumped to $400 per ton in the spring of 2004, a 48% increase from 2002.

Eleven ammonia nitrogen fertilizer plants in the United States have permanently stopped production since 2000, representing a loss of 21% of domestic capacity, the farmer says. AFBF leaders say those losses, and any further declines in the domestic fertilizer industry, will negatively impact America’s food security because U.S. agriculture will become more dependent on foreign energy imports.

AFBF continues urging Congress to pass a comprehensive energy bill that would, among other benefits, increase domestic natural gas production and create increased opportunities for home-grown renewable fuels such as ethanol and biodiesel.