COLUMBUS, Ohio— Recent
huge increases in oil prices are
going to financially pinch some
Ohio farmers still struggling
from two years of low crop
prices and last summer’s
drought.
World oil prices rose in re
sponse to the Organization of
Petroleum Exporting Countries’
(OPEC) actions to limit their
member states’ production. On
Ohio farms, the impact will
depend on whether farmers
bought fuels and other crop pro
duction inputs before the big
price increase, said Ohio State
University agricultural econo
mist Allan Lines. Farmers often
reap preseason dealer discounts
by buying supplies during the
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Oil Price Hike May Squeeze Ohio Farmers
last months of the calendar year.
Farmers who haven’t pur
chased supplies may see in
creases as high as $lO-15 per
acre for non-land operating
costs, which are the variable
costs of putting out a crop, Lines
said. Fuel costs alone may in
crease by $lO-12 per acre, he
said.
“These numbers become sig
nificant as you apply them
across all of the acres you farm,”
Lines said. “For a 2,000-acre op
eration, that’s an increase of
$20,000 up to as much as maybe
$30,000.”
Oil prices have a ripple effect
through a farm operation, Lines
said. “It’s not just fuel costs
alone that will increase, because
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capabilities.
energy costs are embedded in
just about everything else in one
way or another,” Lines said.
The most direct impact would
be on diesel fuel to power farm
equipment and trucks, and pro
pane used in grain dryer opera
tions in the fall, Lines said. A 50-
percent increase in energy prices
would raise these costs by the
same percentage, he said.
Another important input is
nitrogen fertilizer, a natural gas
based product. Lines figures a
50-percent increase in the price
of natural gas would raise nitro
gen prices by about 20 percent.
However, because of the current
excess in nitrogen fertilizers in
the world, it will be difficult to
pass this price increase on to
SYRACUSE, NY - Through
working with the New York Stale
Health Department and local Healthy
Heart programs, the American Dairy
Association and Dairy Council, Inc
(ADADC) put a positive slant on the
Center For Science in the Public
Interest's (CSPI) normally negative
campaign.
The CSPI Campaign-offered free
to health organizations around the
country-uses negative TV, radio, and
print information about the amount of
fat in whole milk to persuade con
sumers to switch to 1% or fat-free
milk. To avoid using negative refer
ences to any category of milk.
ADA DC worked with Department ol
Health and local Healthy Heart pro
gram in Rochester and Albany to
producers.
Other cost increases, based on
a 50-percent energy price hike,
are: machinery and labor costs,
20 percent; lime and farm chem
icals, 8 percent each; phospho
rous and potash fertilizers, 7
percent; seed, 1 percent.
The lingering question is the
effect of continued high prices
on the longer-term costs of pro
duction, Lines said. If the cur
rent 50-percent increase remains
intact, farmers will have to bear
significant cost increases in the
2001 growing season, he said.
“If you have a 50-percent in
crease in the price of energy
maintained over time, and man
ufacturers are able to pass 100
percent of this cost increase on
to producers, overall that would
raise the sum and substance of
variable costs by an average 18
percent over a year,” Lines says.
And the prospects for a long
term price increase are not quite
clear at this time, Lines said. “Is
OPEC going to be able to main
tain a tight market? Right now
they aren’t suggesting a major
increase in production.”
“All we can say is look back in
Adadc Turns A Negative
Campaign Into A Positive
Milk Message
design public service announcements
and consumer events that focused on
the positives of lowfat and fat-free
milk consumption
The local CBS, NBC. and FOX
affiliates were on hand at a press con
ference in Rochester, where blind
folded community members tried
their hand at identifying whole, 2%,
\%, and fat-free milk ADADC also
distributed samples of fat-free hot
chocolate milk to show consumers
nonfat doesn't mean non-tasty Taste
tests were held throughout the region
over a six week period between
January and February 2000 Results
arc still being calculated.
What did residents think of the
campaign 9 “There’s a perception
among consumers that if something
Lancaster Farming, Saturday, April 22, 2000-A33
history. These kind of spikes
have not been sustained, but we
can’t really say for how long this
spike will last, or maybe it’s a
new plateau.”
Farmers don’t have many op
tions for managing the effect of
the oil price increases, Lines
said. Cutting back on inputs
could be short-sighted by saving
costs at the expense of reducing
the farm’s crop yield potential
and gross income from crop
sales.
Topping the management
agenda should be a renegotia
tion of land rents to reflect the
higher costs of production, Lines
said. Hopefully, landowners will
be sympathetic, and if not, farm
ers will have to bite the bullet,
financially.
Another strategy would be to
plant more soybeans, which
depend on fewer petroleum
based inputs than corn, Lines
said. About one-third of all non
land inputs for corn are energy
related, compared to one-fifth
for soybeans. The downside is
that grain markets are swamped
with soybeans, and higher sup
plies further depress prices.
is low or nonfat, it can't possibly taste
good," says Beth Meyer, Public
Relations Specialist for ADADC "It
was a real surprise for many people to
reali/x they couldn't taste a differ
ence between the milk they generally
drink and a lower-fat one And. since
taste is (ill the primary decision
maker, we helped many consumers
enjoy drinking milk again."
In addition to the Rochester and
Albany programs, ADADC also
helped provide materials lor pro
grams in Cortland County and
Delaware County In addition,
ADADC arranged for a local
Registered Dietician to be featured in
an interview on WBRE (NBC)
Wilkes-Barre, in conjunction with a
program in that city
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Lancaster
Farming
PHONE
717-626-1164
OR
717-394-3047
FAX
717-733-6058