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What really pisses me off is that none of these “analysts” who blovates about ethanol is a farmer. I am, and when I look at why I’m having to raise my prices, I can pull up Quicken and just look at my books for the last five+ years and see what is going up:

Diesel fuel, gasoline, oils, lubes, greases, tires (when you can get them — big ag tires are getting hard to obtain), wire (both copper and aluminum), anything made of steel, fertilizer, ag chemicals (with the exception of generic roundup, which dropped the price of glyphosate considerably), seed (because it is produced by other farmers getting hit the same way).

I’ll tell you a little story which brings home the mental disconnect people have about the impact of diesel:

Three years ago, we had grown some grain hay. Grain hay isn’t high value feed - it’s good hay, but it doesn’t have the protein of alfalfa, nor is it desired by the big-bucks horse folks. It usually is “feed” hay, fed to beef cows.

I had a few hundred tons of the stuff, priced to move at $80/ton.

So this rancher stops by and asks about taking all of it - at $65/ton. I tell him “Uh, no, I don’t think so” and he responds by launching into a complaint about the price of diesel.

I’m standin’ there, slack jawed, and when he finished, I decided I was gonna put a stop to this. I asked him “Do you see any clydesdales or other draft horses on this outfit?”

“No.”

“Is that hay in nice, little square bricks?”

“Yea... what’s your point?”

“Look around, man. I don’t put this hay up with draft horses, so it is costing me more in diesel to put this hay up. Unless and until I see your cows drinking diesel fuel instead of water, my sympathy for your complaint about diesel prices is limited, at best.”

Well, he gets a mad on and leaves, telling me that “come next spring, you’ll wish you took the $65.”

It shipped the next year, and not for $65/ton — for $75 to $80 per ton, just as I had been asking.

Three years later, just this past month, I shipped equal quality hay for $140/ton. And ranchers were not arguing one word; they were happy to have any hay at all, because they know that as diesel prices go up, some small, marginal hay producers simply stop growing hay, the supply goes down, and there is no surplus hay in the market. If you don’t buy your hay by October, come February when it is sub-zero and your cows simply must have 40+ lbs of feed per day, there will be no hay available - at any price, because some of the smaller producers look at the cost of diesel and say “Screw it. I don’t have the capital to buy the diesel, I don’t think I’m going to cover my expenses, so I’m not farming this year. I’ll get a job at the mines.”

All thanks to diesel prices.

Corn prices don’t mean a thing to hay prices here. We can’t grow corn, so there’s none of this “hay acres ripped up to plant corn.” Just ain’t happening in the intermountain west aside from perhaps some producers in Idaho.

Increased hay prices here mean increased milk prices in California. Increased milk prices mean increased soybean prices, because dairy herds use a lot of soybean meal in addition to hay; as hay goes up, up, up, the dairy man will start to substitute some more soybean meal for less hay.

But both the hay and the bean meal have to be trucked in there, and what used to be (for me) a $40/ton haul into California is a now $75/ton haul into the exact same market this year; figure a truck carries about 25 to 27 tons of hay per load. The dairyman is paying that increased haul price; and as much as possible, he’s passing it through to the consumer.

The biofuels thing is using up surpluses, but there’s simply no hiding the impact of diesel prices now. We farmers simply cannot absorb a tripling in the price of diesel for more than one year at best. I believe the days of $0.80/gal off-road diesel are gone forever now and from here on out, until diesel prices stabilize, the consumer is going to see food prices go up. When diesel prices stabilize, food prices will probably do likewise within 12 to 18 months.