| As I write this column, crude oil prices are taking a beating as concerns about tropical storm Gustav are allayed. Today, the market is down, but tomorrow? You can find experts who say we are headed for $200/barrel, but you can also find those who say this market is a bubble and we’ll be back at $85/barrel within a year. This market is so sensitive to so many different factors, whether it’s a tropical storm in the Gulf of Mexico, some geo-political posturing in Russia, or tension in the Middle East. The oil market sees and hears all these days and it’s a nervous animal.
I think we’re all getting tired of the “v” word, but volatility is our reality and corn/soy markets are joined at the hip to crude oil. To be honest, I wouldn’t be surprised by crude oil prices over the coming year that ends up at either end of a very wide range of possibilities.
Energy and agricultural commodity markets are so intertwined these days that when oil prices drop, so do futures for corn and soybeans. Food is important, but energy is king and most crop producers have recognized that we simultaneously win and lose from a stronger connection to energy markets.
High crude prices mean biofuels such as ethanol and biodiesel remain viable. Profitable biofuel production stimulates demand which translates into attractive futures values and basis levels for producers. That’s the good news. But we are also energy consumers. I must confess that a year ago, I didn’t know the precise dollar value of a tank full of fuel for my combine or tractors, but I certainly did some quick math this year and it’s an eye-opener. I’m not betting on a return to “cheap” gas or diesel, so it’s pretty obvious that I’ve got to use less fuel!
A very cursory audit of our farm’s fuel use has led me to a few very simple conclusions:
1) I love my 4x4 pickup, but I now view my farm truck for what it is: a fuel pig. Yes, I need the truck, but if I’m honest, most of the time I’m driving it around for transportation rather than making it work. Solution? There are a number of options. Buying a cheap, small, fuel efficient runabout car for trips to parts counter, farm supply, or other tasks is one option that would keep the truck parked more of the time. This means another vehicle to maintain, insure and pay for, but for some producers this will make sense. New trucks are priced to sell right now as urban buyers wake up and smell the coffee, realizing it makes no sense for them to drive a half-ton around town. I’ve heard and read that the new engines that run on 4, 6, or 8 cylinders depending on the engine load offer significant fuel savings. I’m not in a buying mood, so for now, our simple strategy is to make sure the truck is limited to short runs and the family car gets most of the mileage.
2) I need a bigger sprayer. Of all the field operations we do, spraying is probably the most obvious opportunity to incur fuel savings. A sprayer with a wider boom means fewer passes, less tractor time and less fuel. Horsepower requirements do not necessarily rise that much when going to a bigger sprayer, so a wider boom simply means less fuel per acre.
3) Every field pass must be reassessed. I used to broadcast potash on winter wheat stubble in the fall prior to tillage, but now I apply both the potash and urea on the wheat in the spring – two birds with one stone. There are more opportunities to multi-task with each pass and I need to explore these further.
What are you doing on your farm to cut fuel usage? Have you made changes to your equipment or farming practices to cut down on fuel costs? Have you considered producing your own biodiesel on-farm?
High fuel prices are an issue for every producer. Let’s share our ideas on this topic. Click on “Reply to this Topic” at the top of this page and send us your strategies and comments on this topic. After one month, we’ll draw one response and the winner will receive an iPod Nano courtesy of Farms.com.
Peter Gredig
Farms.com | | Author : JoAnn Alumbaugh | | Date Posted : 9/3/2008 12:24:31 PM | |
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