High Fuel Costs Hit Livestock

High Fuel Costs Hit Livestock. I’m Greg Martin with today’s Line On Agriculture.

California rancher Jeff Fowle says it’s an unsettling time to be in the cattle business. 

FOWLE: If you want to experience what we’re experiencing now go to your local amusement park and hop on a rollercoaster and blindfold yourself. I really don’t think there’s anybody out there with any clear idea of how this is going to end up.

That uncertainty comes from the fact that even though beef prices are great right now, that doesn’t mean you’re going to see a better income. 

FOWLE: You’re seeing almost what seems like exponential increases in our input costs and even though we are currently enjoying some of the better markets that we’ve seen in decades with the beef industry, with that increased input costs due to fuel and feed our profit margin has not increased. 

Fowle says the primary culprit is higher fuel costs.

FOWLE: We see the trickle-down impact as it increases the input costs for those who are growing the commodities that we feed the cattle. We’re a fossil fuel dependent industry and we rely on diesel or gasoline in our tractors for preparing the fields.  We rely on fossil fuels to harvest our crop.  We then rely on fossil fuels to get that crop to wherever it’s being processed or to the rail.  The rails use the fuel to get it to the next port.  The trucks pick it up at the port and haul it to the farm or ranch.  It’s interlinked and as fuel prices go up, each of those stages of production, their cost goes up which has to be added on to the end product. 

Fowle says those costs are coming back to hit him hard.

FOWLE: Last year I was paying around $254 a ton for the feed I was supplementing with and this spring the last load that I bought was at $326.  Over the course of the last 12 months I’ve seen about a 19 almost 20 percent increase in cost just for the grain. 

And farmers and ranchers will also feel the squeeze the way the rest of us will.

FOWLE: I don’t think there will be a food in the supermarket that will not see an increase in cost over this year especially if he price per barrel of oil continues to go up, we can expect much higher food prices. 

Fowle talks about trying to plan for higher fuel costs.

FOWLE: You’re taking a gamble, is fuel going to decrease in price between now and June or is it going to go up?   If you’re fairly confident it’s going to be up you put together as much money as you can now and fill up all your tanks and hope you guessed correctly.

That’s today’s Line On Agriculture. I’m Greg Martin on the Ag Information Network.