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Archive for Sunday, June 26, 2005

Fuel costs may drive custom cutters from field

Harvesters saying ‘to heck with it’ as soaring prices cut into profits

June 26, 2005

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Think you're suffering at the gas pump these days, aghast at the cost of filling up your little Honda Civic - or, worse, your sport utility vehicle?

Talk to Rick Farris for a reality check.

During the average day's work in the field, the custom crop harvester's operation will burn between 900 and 1,000 gallons of fuel in his combines, trucks and other machinery.

Just a couple of years ago, the same amount of fuel would have cost Farris $1,000 to $1,200. Now, he's paying more than $2,000.

If that sounds steep, consider how much he shelled out for fuel in 2004 as he traveled the country harvesting crops for farmers.

"Oh boy, it was $88,000 last year, over the six-month period that we're operating. The year before that, it was about $64,000, and I expect my fuel bill this year to be probably in the range of $110,000 to $125,000," said Farris, who, with his crew, spent much of this week cutting winter wheat at farms near Protection, 260 miles southwest of Lawrence.

Farris, a 1967 Kansas University graduate who lives in Edson, near Goodland, has plenty of company these days.

He's among the many custom crop harvesters who - fanning out across central and western Kansas this week - are feeling a severe pinch when they go to fuel their steel armadas of combines and trucks.

When the price of crude oil approaches $60 per barrel, custom cutters must pay more for gas, in turn adjusting upward the per-acre or per-bushel rates they charge to farmers for harvest.

"We're left with the option of passing it along, or going broke," said Tim Baker, executive director of U.S. Custom Harvesters, a Hutchinson-based professional association.

If fuel prices don't subside, industry experts say, the ranks of custom crop harvesters could rapidly dwindle.

"Well, some will find that they can't continue, and they'll leave it, and some will find another, more efficient way of doing business and hang on," Baker said.

Numbers dwindling

The concerns Farris and Baker expressed were echoed by other custom harvesters cutting winter wheat in Kansas this week.

For Gale Shughart, a custom cutter from Lawrence, the pain that high gas prices are causing couldn't be more stark: Some of his peers are getting out.

"In Blackwell, Okla., where there used to be 20 harvesters, this year there were three. The numbers are down. People just keep dwindling away," said Shughart, reached on his cell phone in north-central Oklahoma last week, where he was busy cutting wheat.

Rising gas costs are helping drive them out.

"Well, it's damned expensive. Two years ago, fuel was well under a dollar, and I paid $1.89 for it yesterday. Add 40 more cents per gallon for highway fuel (used in road vehicles and taxed by the state)," said Shughart, 52.

He's been in the business since 1995, and owns four combines, each worth well over $200,000.

"My fuel bill's a heck of a lot bigger than it was two years ago. If we combine 30,000 acres in a year, it adds 60 grand" in expense that he has to pass along to the farmer, Shughart said.

"As a matter of fact, I'm settling up with one right now, and they're not going to understand it very well," he said.

But Shughart, who owns 700 acres of his own in rural Oskaloosa, where he grows soybeans, corn and wheat, said he's going to stay in the business.

"You don't have much choice. You develop a customer base across the nation, and you just don't give up overnight. It took a few years to build, and you don't want to quit. But eventually it could come to that."

Fewer old timers

It's much the same story for Lance Frederick, 43, a custom crop harvester who lives in Alden. This week, he was in Ness City, cutting wheat.

"We burn close to 3,000 gallons of gas on a good day of harvest, with eight machines in operation. That's costing us over $6,000 a day. Two or three years ago, that would have been half," he said. "Not a very pretty picture, is it?"

When Carl Figgins, a custom crop harvester from Mankato, went to fill up his combines, two tractors and grain carts earlier this week, he used $1,400 worth of fuel - and that was for a half-day's run.

"It's biting us big time; it's biting my customers right along with us. We have to have more dollars per acre to make it work for us, and they need more money on the crop side to make it work for them. It's a pretty deflated (wheat) market," he said.

Both the custom crop harvester and the farmer are suffering, he said.

Figgins, 60, hasn't missed a harvest run since 1959. But people like him are growing fewer.

"There's a lot of people backing out because of the high cost. They're losing money, and some very good people that's been doing it a lot of years, they're saying 'to heck with it.'"

Farris, the harvester working near Protection, said he hated to think about leaving the business.

"I've got a nephew (Patrick Farris, also a KU graduate) that's been with me now a long time. He started when he was 14, and I hope that we have something for him to take over," Farris said.

Comments

Richard Heckler 9 years, 5 months ago

Don't expect the cost to dwindle so long as our military is busy trying to take over the middle east. We are killing their people,our soldiers and making Bush pals wealthier. Were spending Billions monthly which is going to equal trillions in the not to distant future. American oil corporations are raking in very big bucks.

I say to the harvesters...good luck.

OldEnuf2BYurDad 9 years, 5 months ago

Forgive the harshness, merrill, but your simplistic answer is mostly wrong. Experts have been telling us for years that our country is sorely lacking in oil refinery infrastructure, but no one has been listening. Our fuel price problems have very little to do with war and very much to do with the fact that we cannot convert crude to gas fast enough to keep up with demand. When a 20% rise in crude prices results in a 50% rise at the pump, there is much more going on than just war and greed. Our environmental public policies make it impossible (from a business standpoint) for an energy company to build new oil refineries and power plants. No one will invest in new energy infrastructure because it's a losing proposition. Remember the power 'brown-outs' in California a couple of years back? It's just a matter of time before that starts happening all over the country.

If you want to pull a page out of the liberal playbook, complain about gas guzzling SUVs and our lack of functional public transportation. Don't take the cheap route and blame everything on war. It may be an unjust war, but it's narrow-minded to blame everything from gas prices to acne on the war just because it's an easy target.

Kansascityian 9 years, 5 months ago

I feel it necessary to comment that oldenuf2BYurDad is partially misinformed about why gas prices are the way they are. CRUDE OIL prices since 9/11 have doubled and the war in IRAQ, has provided more instability in the market , causing prices to increase further. I also should mention that higher demand from other developing countries has increased demand as well. Please see this website on historical oil prices and reasons for the fluxuations http://www.wtrg.com/prices.htm . Regarding his next point, I will agree that there are situations where environmentally conservative people have hindered the development of refineries and nuclear reactors in our coutry. However, this conservative approach to the development of energy services is not without value. It has recently been prooven that Global Warming is real, and that if we do not make logical challenging decisions on how to develop our infrastructure in an intelligent ecological manner, we will cause changes in the earth's ecosystem that we cannot predict. This brings me to one of the several good ideas advocated by Thomas Friedman of the New York Times, whom has been advocting a Manhattan project for the development of new sources of energy. This project would use the minds of people here in the USA, instead of our guns, to define world energy production. Because if we do not another coutry will perhaps communist China. The demand for new source of energy is there, as are the resources to attain it. However, the will rests on our leaders who lack the imagination or drive to get anything of value established for the United States, especially Mr. Bush. I feel that his trust fund is where his interests lie not in the economy of the people of the United States.

MyName 9 years, 5 months ago

oldenuf: The "brown outs" in California were caused, at least in part, by Enron. They actually told power companies there to turn off power so that they could make more money! Of course, if they had built more capacity in California, Enron wouldn't have been in a position to where it would actually make more money by turning the power off, but that's beside the point. The point is that there are no easy answers to the energy problem and it's going to only get worse. And what really stinks is that we haven't had a president since the 1970s that actually took this problem seriously!

terrybowling 9 years, 4 months ago

Folks I have just stumbled accross this while looking for information on fuel consumption for harvesters. I am in the south and traveled today through MS. Some are already starting to pick the record corn crop in parts.

I also have stumbled upon a device that is said to save a min of 10% fuel consumption on diesel engines. I tested the unit on a 4920 spreader in MO, and a Row Crop Spreader in PA. both tests show a 10.3 and a 15% decrease in fuel consumption. I took the one off the unit in PA and installed it last night on my GMC duramax. So far, and I am not joking, it is working. if you want more information on where to look see fuelsaverbydam dot com. I am a spreader truck sales guy in the south so just thought i would pass on the good word. It is important to all of us in the business to reduce the input costs in ag.

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