September 9, 2005 | By: Aimee Nielson
LEXINGTON, Ky.

Hurricane Katrina shut down about 90 percent of the Gulf Coast’s oil output, adding to already rising fuel costs across the United States. As fall harvest approaches for Kentucky farmers, the timing couldn’t be worse.

With the increased prices for off-road diesel fuel used for combining, Craig Gibson, area Extension farm management specialist for the University of Kentucky College of Agriculture, estimates that harvest combining costs will be about $1.65 higher per acre than last year. Even before the devastating hurricane, farmers faced higher fuel costs and a less impressive crop.

“We’re trying to get an idea of what the hurricane damage may have done to the crops in the field,” Gibson said. “We’ve noticed a lot of the corn is not standing well, which will result in a higher field loss and lower yields. Plus, combining is just not as efficient when you’re harvesting a grain crop that’s down; it costs more to get that crop out.” 

Add higher fuel prices to the increasing cost of getting crops out of the field, and we have a real problem, Gibson added.

Some western Kentucky farmers were shell-shocked the first few days after Hurricane Katrina came ashore to hear that a local fuel supplier could not deliver fuel because he simply didn’t have any.

“Worse was that they couldn’t even tell us what the price might be when they do get fuel,” Gibson said. “We’ve just never experienced anything like this before.”

Even after harvest, farmers may incur additional fuel costs to transport the grain to storage.

“Depending on the mode of transportation, it could cost between a half-cent to one cent more per bushel than last year just to move the grain to an end point for storage,” Gibson said. “If they keep the grain on-farm, it has to be dried and you incur costs for propane or natural gas. Those (costs) are already higher, and farmers will probably spend 5 cents more per bushel to dry grain than last year.” 

Profitability will be burdened by these higher costs, and many farmers were already burdened by higher production costs earlier this year.

“The profit margin is already lower than last year,” Gibson said. “And it’s even more frustrating trying to predict the 2006 crop costs.”

Gibson said there are things farmers can do, including looking for small ways to cut costs to maximize profits. There’s not one major thing they can do to help themselves; it’s more about all the little things, he said. Good management is essential to success, especially now.

Small farms and farms with higher indebtedness will be the ones Gibson said will feel the impact the most.

“We’ve never reached the point where we haven’t seen a return over variable costs,” he said. “There is a return, but is it large enough to cover indebtedness payments, family living expenses and other overhead costs? That is the real question.”

Contact: 

Writer: Aimee Nielson 859-257-4736, ext. 267

Contact: Craig Gibson 270-827-1395