Oil price spike puts farmers in grim situation
Jun 18, 2008 10:07 AM
Most anyone who has paid a visit to the grocery store or gas pump lately can attest that prices are high and getting higher.
There’s no relief in sight, and things could get a lot worse before they get better, the leader of Texas’ largest farm organization said, particularly for the men and women who grow the crops and livestock that have become the backbone to food supplies the world over.
“I’ve been farming since the 1960s,” said Texas Farm Bureau President Kenneth Dierschke, a San Angelo-area cotton and grain farmer. “In the years since, we’ve all seen dozens of grim situations in agriculture. They pale in comparison to the major problem that is shaping up in our industry at this very moment.”
Indeed, food prices for the consumer have increased in recent months, Dierschke said, but they are still a bargain. As a percentage of disposable income, Americans still enjoy the lowest food prices of any country on the planet.
Some groups have incorrectly pointed to increased commodity prices as a culprit in these price increases. But that is simply not true, Dierschke said.
“We want Texas consumers to understand several factors are involved, but the main reason food prices are higher is the price of oil,” the Texas Farm Bureau President said, adding that if unchecked, escalating oil prices could spell ruin for many of his fellow farmers, even during times of record crop prices.
Dierschke explained consumers and agriculture producers face similar problems with high energy costs. Both must manage their budgets to make ends meet. Farmers in particular are finding it difficult to pay for spiraling fuel and fertilizer costs.
“I know that many Americans are being told that farmers are becoming wealthy in this run-up of commodity prices,” Dierschke said. “It’s simply not true. Prices of petroleum-driven crop inputs have blown through the roof. I cannot imagine farmers putting seeds in the ground next year if the prices for row crops fall and if we are paying the current price for diesel—or more.”
The situation has created what Dierschke describes as a “slow train wreck” for the farmers of Texas.
“The situation we are in now will not change unless the price of oil is reduced significantly,” he said. “Even with commodity prices at record levels, some farmers are being forced into making major modifications in the way they farm, including reducing the amount they produce. And if that happens, consumers and farmers alike could share in a farm crisis the likes of which we’ve never seen.”
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