_Search The Pilot * _ Fuel Prices Taking Toll ------------------------------------------------------------------------------- By Tom Steever _ Doug Wilson is getting to know his fuel supplier better. The Livingston County, Ill. farmer is seeing more of farm fuel salesman Michael Coyne this year because of the price of fuel. It’s not that Wilson is using more fuel, but he’s getting smaller amounts delivered to his farm more often. Normally most of Coyne’s customers contract a year’s supply of fuel to lock in a guaranteed price. When contract renewal time came this year, the price of fuel was approaching record highs so most farm customers put off signing contracts in favor of buying smaller amounts of fuel at whatever the price is on the day of delivery. “From last year at this time, fuel prices are 40 to 45 cents higher,” said Coyne, checking the fuel level in Wilson’s storage tanks. “The way grain prices are and we just don’t feel comfortable going for a full year on (fuel price contracts).” Coyne usually makes two visits a year to fill Wilson’s tanks, but he anticipates returning five or six times, delivering lesser amounts. Until fuel price drops, Wilson will buy only enough to see him through spring. “I may only be purchasing what I need at any given time, hoping for a lower price on fuel,” said Wilson, referring to the 43-cent jump in fuel this spring. The oil price is creating a greater cost of production burden for farmers. “We’re talking about an increase of 1 to 2 percent in our production costs,” said American Farm Bureau Federation senior economist Terry Francl. “That comes right out of the net farm income, and obviously our net farm income is low, given our prices at this point.” The price will add 10 to 15 cents a bushel to the production cost of corn, explained Francl, “so it will have a dramatic impact.” The price impact is immediate but keeping tractors fueled only accounts for 25 percent of what oil prices mean to farmers. If petroleum prices remain high, they eventually will affect other input costs such as propane for grain drying as well as pesticides and fertilizers. “Seventy-five percent of the cost of anhydrous ammonia is natural gas, ’ said Francl. ‘If these prices stay at current levels, certainly six months, 12 months down the road, it will raise those prices also.” If there is an up side for farmers facing high oil prices, it may be the potential boost to renewable farm-raised fuels such as ethanol and biodiesel. “It has to be positive for something that’s United States grown, renewable and environmentally friendly,” said Wilson. “Usually it takes something outrageous and costly to get people’s attention and I think the rise in prices is going to do that.” High oil prices can certainly be viewed as a negative for farmers, said Wilson, “But timing is everything and I’m hoping that it’s ethanol’s time right now.” Tom Steever is with the American Farm Bureau Federation. Steever is a producer in broadcast services for the American Farm Bureau Federation.