Expert: Energy costs hit farmers hard

WASHINGTON – Comprehensive energy legislation now in Congress would ease high energy prices pinching all Americans and, in particular, America’s farm families, according to the American Farm Bureau Federation.

About the bill. In testimony before the Senate Environment and Public Works Committee, Bob Drake, vice president of the Oklahoma Farm Bureau, called for the passage of energy legislation that would create a diversified energy portfolio and help restore calm to the energy marketplace.

Testifying on behalf of the American Farm Bureau Federation and the Oklahoma Farm Bureau, Drake said the comprehensive energy bill would boost domestic energy supplies by focusing on further development of renewable sources, such as ethanol, biodiesel and wind, while at the same time increasing supplies of domestic traditional energy sources such as natural gas, oil and coal.

Natural gas vital. Drake said that natural gas is perhaps the most important energy source to production agriculture, since it is used to power traditional farm equipment and is the primary raw material for the production of virtually all commercial nitrogen fertilizers in the United States.

He said the current price volatility for natural gas threatens the existence of what remains of the U.S. fertilizer industry “and will exacerbate America’s dependence on foreign sources of energy and fertilizer.”

Comparisons. Drake said that during the 2000 planting season, ammonia fertilizer cost around $100 per ton. During the 2003 growing season, however, farmers faced ammonia prices of $350 or more per ton.

The Agriculture Department estimates that it cost U.S. farmers and ranchers an extra $2.6 billion to produce the same amount of food and fiber in 2003 when compared to the 2002 growing season.

Drake said that farmers in Oklahoma’s Panhandle region report the cost of operating their natural-gas-powered irrigation pumps increased more than 70 percent in 2003.

One producer, in Beaver County, Okla., reported to Drake that those costs alone resulted in a $26,000 drop in net income.

More expense. “In addition, farmers and ranchers have experienced diesel fuel price increases 40 percent above historical averages,” Drake said.

“With thin margins already being experienced in agriculture and the prospect of high energy prices in the foreseeable future, this added expense, which cannot be passed on in the price of agricultural commodities, will erode the financial positions of many farm and ranch families.”