Rising fuel prices due to the conflict in the Middle East are increasing transportation costs for farmers
An ag economist says the ongoing conflict in the Middle East is putting more pressure on the entire supply chain.
Frayne Olson with North Dakota State University says the transportation system has been absorbing some of the higher diesel prices, but farmers could start to be impacted soon.
“The increasing fuel service charges that’ll be coming up in a couple of weeks will add about 5 cents per bushel to the cost of hauling grain,” he says. “Some of that will be reflected in basis levels. Some of it may be absorbed by the system.”
He tells Brownfield air freight costs are also expected to increase.
“A lot of the parts and different pieces that farmers use for overnight delivery, if they need to have something delivered really quick, a lot of times that comes by air.” he says. “Those costs can increase when you think about the fuel consumption and what the cost of fuel is versus the total cost of trying to transport a product.”
Olson says the longer the Strait of Hormuz is shut down, diesel prices will continue to increase. He says he’s also watching for any changes in the cost of propane and natural gas that could also impact costs for farmers this fall.
