California: Rising Prices Drain Farmers’ Pocketbook

The road to higher food prices begins at the diesel pump and winds through the auto-parts store, the fertilizer-supply company and even the hangar at the local airfield. By the time that road reaches the farm, California farmers and ranchers may have paid double—and then some—to grow and transport their crop. 
"We've seen diesel prices more than double in the last six months," said Don Cameron, a tomato and other products grower in Fresno County. "We're coping with it, but what that means is, we're going to have to get more for the profit we grow wherever possible. We've got to pass this on, whatever way we can, to the consumer."

A year ago, a gallon of No. 2 diesel fuel averaged USD 3.25 in California (1,017 Euro/liter), according to the U.S. Energy Information Administration. By April, the price had risen to USD 3.98 (1,257 Euro/liter); in October, the average had ballooned to USD 4.48 (1,351 Euro/liter). That adds up for farmers. And it's having an impact on the food market.
 

Chris Torres, who grows rice and runs a trucking company in Colusa County, said he's looking at higher bills for everything. On the farming side, Torres said he's done for 2021 and has not yet begun to crunch the numbers for 2022—but the picture already looks ugly. "I've heard rumblings of aqua ammonia possibly doubling in price," Torres said of the nitrogen fertilizer widely used in rice farming. "Fuel to run the tractors is obviously going to be half again as much more, if not twice as much more. The chemicals and the operating costs and everything are going to go up."

That tractor fuel is red-dye diesel, so named for the reddish tint denoting its tax-exempt status. "It's exempt from the road taxes, but it's not exempt from going up in price, and we still have to pay sales tax on it also," Torres said. Dry fertilizers manufactured from petroleum products also are likely to see an increase, he noted.

Cameron said UN 32, a nitrogen fertilizer, has tripled in price "and could go higher in the spring," on account of high demand, and supply-chain issues are making it difficult to obtain herbicides. “Nobody really knows what will happen to the farmer's," Torres said, adding that he's unsure he'll be able to recover his expenses when crops go to market. "That's all part of the gamble that we take in farming," Torres said.

Agricultural-aviation operators aren't immune to soaring fuel prices. "But what I'm more concerned with is the availability," Rick Richter, who runs an aerial-application company in Maxwell, said. "That's going to be a concern, I think, going forward. In the summertime, we have the fires; they take priority when it comes to 'Jet A.' (aviation fuel formerly known as "kerosene", Editor’s note). We had to wait sometimes three weeks for a load this past summer when the fires are burning."

Transporting the fuel to the airfield also is an issue, Richter noted. Extra storage and long-term fuel contracts could be an option, but not every farmer takes advantage. "We've never done it," Cameron said. "We don't have a lot of storage on the farm, especially when we've got a lot of equipment running. It's pretty much hand-to-mouth. We try to stay ahead of it. At least we have had supply."

On top of all this, Cameron said, are the drought—recent rains notwithstanding—and rising labor costs. California's minimum wage will go up Jan. 1, to USD 15 for employers of 26 or more people, and USD 14 for those employing 25 or fewer.

"It's unfortunate because it's going to lead to higher food prices in the next couple of years," said Cameron, who also chairs the state Board of Food and Agriculture. "It's not going to be a one-year problem; I think it's going to be a multi-year problem. Unfortunately, it hurts the people that can't afford it the most."

Torres said there isn't much choice but to keep on farming. "You do what us farmers normally do," Torres said. "We roll the dice and keep moving forward."

Sources: California Farm Bureau Federation