May 30, 2007 | By: Laura Skillman
PRINCETON, Ky.

As fuel prices continue to break record highs, the biggest challenge farmers face is how to absorb those costs in operations that already are running as lean as possible.

“Folks were already trying to be efficient before the latest price upswing,” said Chad Lee, grains crop specialist with the University of Kentucky College of Agriculture.

Farm Management Specialist Craig Gibson said last year’s data from the Kentucky Farm Management Program showed farms in the state consumed 10 gallons of gas and diesel per acre. He said one of the larger operations in the Ohio Valley farm management area consumed 7 gallons per acre. Fuel consumption, he noted, can vary based on size and type of operations.

Because of the wet fall in 2006, many fields were rutted at harvest and farmers had to take on extra tasks such as disking to remove the ruts. As a result, he expects consumption on these farms to increase in 2007.

“There are indirect aspects too,” Gibson said. “Farmers hiring others to spray their crops, haul their grain or livestock or other tasks will see higher prices as fuel costs are passed along. Grain drying costs this fall are likely to be higher as well.”

Other production costs have also increased, including seed and fertilizer. When farmers talk about the expense of planting their crop, they talk in general terms, encompassing all increased costs, he said.

“They will tell me ‘the cost in putting this crop out was much more than I thought,’ ” Gibson said.

For wheat farmers still waiting to make a decision on whether to harvest or destroy a field damaged by the Easter freeze, Lee said they really need to take a close look at the heads and stems of the plant.

“We say you need a minimum of 50 heads per square foot to make a good yield and lots of fields are already down to 30,” he said. “If all heads produce, you will get decent yields but many are on compromised stems that will fall over. In that case, it is best not to harvest it.”

Lee said going ahead and killing the wheat in preparation for planting soybeans will be less costly than running the combine through it. He also noted the freeze has delayed harvest by one to two weeks. The harvest delay will mean a delay in soybean planting, and he said he would not compromise soybean yields for a poor wheat crop.

In other crops, farmers may be willing to put up with a few more weeds and skip an herbicide treatment. But they should do so with a very critical eye. A skipped spraying could end up costing more in the long run because of weeds competing with the crop and reducing yield, he said.

This would also be an excellent year to skip foliar fertilizer use, Lee said. As long as a producer is using lime and soil-applied fertilizers according to soil tests recommendations, UK research shows that the crop does not need the foliar fertilizer, which will cost around $5 to apply plus the cost of the product. In most cases the unit price of foliar fertilizer is much higher than the unit price of soil-applied fertilizers, making foliar fertilizer an expensive option.

Lee also noted the jury is still out on using fungicides on corn. In continuous corn situations where susceptible hybrids are being planted, it is probably worthwhile, but otherwise it is questionable.

There is a difference between increased yield and increased profit, Gibson said. If a production practice costs $5 per bushel to employ, but it only increases production by one bushel, that’s a net loss on $4 per bushel corn, he added.

Gibson said he also encourages producers not to try to make changes or updates to their farming operations all at once, but to have a three-year plan. Focus on what will result in the biggest economic benefit first, such as tiling a field for better drainage, and then address the other things the next year, such as purchasing a new piece of equipment.

“Sometimes it works and sometimes it doesn’t, due to unexpected events,” he said.

Additionally with good grain prices farmers may be tempted to borrow money to undertake several capital projects all at once. Gibson said just because the money may be available doesn’t mean this is the best option. He advises farmers to consider their needs, not wants, and what impact borrowing will have on their overall operation profit. If it makes sense, do it, otherwise delay while dealing with record high operating costs.

Contact: 

Chad Lee, 859-257-3203, Craig Gibson, 270-827-1395