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The hidden costs of record-high diesel prices on ag transportation

An ag economist says record-high diesel prices could reshape the cost of agricultural transportation. 

“It takes a lot of diesel to move goods and services throughout the economy,” he says. 

David Widmar with Agricultural Economic Insights says the long-term impacts will likely be felt throughout the supply chain.

“Over time, that increase at the pump is going to work its way through the economy,” he says. “It might show up in terms of farmers trying to harvest their crops this year, farmers trying to deliver their grain, and trying to get their parts and goods delivered to our operations.”

He tells Brownfield it’s already forcing producers to rethink marketing decisions.

“Producers thinking about selling grain, storing grain, or marketing it, will have to keep in mind how much it’s going to cost to move that grain to the local elevator, the ethanol plant, or the crush plant that’s several miles away,” he says. “We’re going to have to recalculate all of that math.”

Widmar says farmers should be revisiting their marketing plans and budgets as fuel costs continue to rise.

According to AAA, the national average for diesel is $6.44 per gallon, up from $3.40 this time last year.

AUDIO: David Widmar, AEI