11/11/05 Get used to high fuel, fertilizer costs

In the aftermath of Hurricanes Katrina and Rita American agriculture producers have been hit with skyrocketing fuel prices and problems transporting grain. USDA chief economist Keith Collins told the congressional ag committee that energy costs will be problematic the rest of this year and next. COLLINS "Farmers paid 43 percent more for diesel fuel in October of 2005 than a year earlier. The higher energy prices and market disruptions are raising farm production expenses, pressuring the storage system, lowering crop prices to producers and raising farm program costs. Energy costs will be a financial problem for producers this and next year." The Energy Department's Howard Grunsbech say the cost of fertilizer is also burdening the ag industry. GRUNSBECH "Specifically in nitrogenous fertilizers. Every dollar added to the price of a thousand cubic feet of natural gas costs agriculture over 200 million annually in direct expense and costs the fertilizer industry almost 500 million annually." Now the good news. Collins says US agriculture is strong enough to absorb the shock, diesel and fertilizer costs have dropped, commodity prices have increased, farm demand remains strong and there are government safety net programs to help soften the income drop for producers. Voice of Idaho Agriculture Bill Scott