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Rising diesel costs sharpen focus on farm breakevens

The chief economist at the USDA says rising diesel costs are becoming a greater concern for agriculture as harvest continues.

Justin Benavidez says fuel costs are pressuring balance sheets.

“Until the Strait (of Hormuz) has reopened or there’s access elsewhere to more affordable diesel, I think some of these prices might be with us (awhile), because these are a big piece of the puzzle when it comes to the cost of production.”

In the latest episode of Inside D.C., Benavidez tells Brownfield fertilizer prices aren’t great either, but…

“Fertilizer isn’t part of every run through the field; fuel is part of every run through the field,” he says. “I’ve been hearing more about diesel prices in the last month, but when you look at sulfur prices and their influence on some of those phosphate fertilizers, those are certainly pressure points as well.”

He says it’s a year where farmers should absolutely know their cost of production, and have a plan of how they plan to market their grain.

“I know people want, instead of $5.30 corn, they want $6 corn. They would see that 70 cent gap as a loss, but it’s important to remember if $5.30 covers your cost of production, you still made money.”

Benavidez says the USDA’s updated cost of production forecast, expected in December or January, will be updated to reflect rising input costs.