Farmers fear higher energy taxes will make a bad situation even worse

Friday, June 29, 2007

Farmers today are faced with many tough decisions: Do I have the money to purchase new equipment? Should I sell some of the livestock I maintain? Would I save money by planting less acreage? Should I sell the land that has been in my family for generations to developers?

These are just a few of the decisions that Jason Terry, a Marshall County wheat and cattle farmer, was confronted with in just the last year.

It is no secret that each year farmers see less and less of a profit. And this fact begs the question: Why?

To help find an answer to this question, Terry spoke candidly about what exactly is threatening to put more family farms out of business for good.

"Through the years, we have experienced various hardships that have taken a toll on the profitability of farming," said Terry. "Of the obstacles we've had to cross, the most difficult are those that are imposed by man -- not nature.

"When we experience a drought or flood, for example, it hurts and even destroys the crop, but we receive government disaster relief funds to help. While we don't turn a profit on these funds, at least we are able to recoup the money we put into planting the crop.

"But what is most devastating to our farm income is the rising cost of fuel and fertilizers -- and both are heavily influenced by the ever-rising price of energy."

And higher energy taxes being considered by Congress could take a bad situation and make it even worse.

Higher energy prices have very different impacts across agriculture production, but one thing remains constant: the expense to plant a crop and maintain livestock rises significantly as energy costs rise.

Crop producers, especially those who harvest corn and wheat, are sensitive to increases in energy costs because fuel and fertilizer costs are directly linked to energy prices.

In the past five years, diesel fuel, the primary fuel source for farm machinery, has more than doubled in price. In June 2002, diesel was $1.28 per gallon. In stark contrast, the price of diesel fuel in June 2007 is $2.79 per gallon.

And as fuel prices sky-rocket, the machinery costs that farmers have to absorb increase by leaps and bounds as well.

According to Terry, his farm's machinery costs account for nearly 25 percent of the farm's total expense. This number is up 4 percent from 2006 and up 10 percent from 2002.

"Another cost that farmers have to absorb -- and is also affected by the increasing price of energy -- is nitrogen fertilizers," said Terry. "Natural gas is the main component in the production of nitrogen fertilizers, thus the price of fertilizers is directly linked to the price of natural gas."

Jimmy Carter, a fertilizer dealer in Lincoln County, reported that the price of fertilizer has doubled in the past two years.

"We've tried to cut back on the amount of fertilizer used on our wheat crop, but to produce a yield that will feed the livestock, compete in the marketplace and ultimately deliver a profit, we simply cannot cut corners," said Terry.

For farmers that harvest wheat for the purpose of cutting hay to feed livestock in the winter months, it is almost impossible to make a profit.

"As the cost of producing wheat increases, the price of cattle does not," said Terry. "In fact, we downsized our herd by 30 percent in the past two years because we cannot afford to maintain a herd that large."

These rising energy costs not only make it difficult for farmers to yield a profit, but they also cause farmers to struggle to keep the farm and land in the family for generations to come.

"We can point our finger at several sources to lay the blame for increasing energy prices, but what's done is done," said Terry. "What the farming community can do is look at the missteps of those who have imposed these hardships on us, make our voices heard and try to change things for the future."

One point that Terry feels most farmers will agree with him on, is that any attempt to impose a Windfall Profit Tax on large oil companies will put farmers into further financial turmoil and dig into their already shallow pockets.

"If new energy taxes are placed on oil companies, they will not pay the price; instead, the taxes will be passed on to consumers and farmers alike," said Terry. "And we cannot afford to support these higher taxes, as we can barely afford to cover the costs it takes to plant this year's crops."

The nation's agricultural communities have enough challenges without having to absorb higher taxes on energy. Diversity of supply, not new taxes, will help secure the future of farmers, like Terry, as well as America's energy needs.

"The farm that I call home was established over four generations ago, and it is a sad realization, but one that I have accepted, that one day I may have to sell the land that my great-grandfather worked so hard for because I simply cannot afford to keep it operating due to the increase in production costs," said Terry. "The agriculture community isn't asking for a break, we just want to be considered in the equation."

Mackenzie Carter was raised on a large cattle and row crop farm in Middle Tennessee, and she continues to stay engaged in various activities within the agriculture community.