An ag economist says the continued rise in fuel prices will impact profitability in the livestock sector.
Charley Martinez with the University of Tennessee says trucking costs are starting to creep up. “The rule of thumb usually is whatever the price of diesel is per gallon is usually what a loaded truck mile is,” he says. “From that perspective, it puts pressure on costs. For diesel this week, for instance, is sitting at $5.15, which is up from $4.89 a week ago.”
Martinez says the pressure becomes two-fold. “One, it increases the cost of moving these animals on the livestock side of things,” he says. “But also, if the cost is so much or becomes such a burden, it could lower some of the prices being offered for animals. And I think we’re seeing that a little bit on the heavier weighted animals on the feeder calf side of things.”
He tells Brownfield row crop producers are also being impacted. “That’s an increased variable cost that is coming at one of the worst times for a row crop producer,” he says. “Even though some of the prices have rebounded on the row crop side the last couple of months. Now we’re having to sustain a different cost outside of the input costs that have gone up as well.”
According to AAA, the national average price for diesel is $1.57 higher than a month ago, and $1.69 higher than year-ago levels.
