And a little closer to me and mine....what's going to happen to farming when the 'cheap' fuel inputs are no longer cheap? WHEN oil starts to run out, what will happen to the current 'agribusiness' model? Will it undergo a fundamental transformation to a more decentralized, simpler small-scale system, or to something more centralized, huge-scale and heavy-equipment focused, run by multinationals that will be the only ones left who can afford the fuel inputs to equipment, fertilizer, etc.? I don't think the picture looks too rosy for independent small farmers in the future, and maybe not even for the multinationals.
Farmers caught in fuel spiral
Ed Rempel, a farmer from Starbuck, MB, becomes defiant in the face of skyrocketing diesel and fertilizer prices. "We're going to quit selling," he declared in an interview. "The marketplace will simply have to pay us more for our production. If they don't, we're gone." Rempel realizes that a mass, worldwide boycott of grain markets by farmers is unlikely, so he and his friends have been considering acting like farm input suppliers and passing along their costs. "But how are we going to bill the markets for a fuel and fertilizer surcharge?" he asked. Farmers across the Prairies are harvesting a crop with combines burning a more and more precious commodity. The price of fuel has been zooming higher for the past year, and Hurricane Katrina has blown it through the roof. Later in the fall, with farmers licking their wounds from high fuel prices, many will have to head back into the fields to burn probably even more expensive fuel and pour into the ground another precious commodity: fertilizer. Both ammonia and urea fertilizers are made with natural gas, a commodity that has more than quadrupled in cost in the past five years. The disruption of the Gulf of Mexico energy industry by Katrina has cut US energy supplies by about 10% and competition for North America's remaining sources of energy is expected to become intense. "We've been dealing with these occasional price spikes for five years now, and it looks like we're about to see round three," said Roger Larson, president of the Canadian Fertilizer Institute. "I wouldn't be too optimistic that there's any room for fertilizer manufacturers to improve their costs of production in the next six months." Farmers can read that as meaning fertilizer prices are going up. Diesel prices have also steadily increased in recent years and this recent spiraling comes at the worst time for many farmers like Ernie Sirski. The Dauphin, MB, farmer is in the middle of harvest and dreads the thought of his soon-coming fuel bill. Only a couple of years ago he paid about 45 cents per litre. Now it might be 85 cents, or more.
(Western Producer 050908)