What is in this article?:
- During Wednesday hearing, Senate Agriculture Committee tackled higher energy costs, biofuels and regulations.
- Panelists asked how best to shape energy policy.
Veteran Kansas farmer Stan Townsend, who testified on behalf of the Kansas Farm Bureau, told the committee farming has “not been spared” the effects of higher fuel and input costs. Townsend’s family runs a feedlot and also grows corn, wheat and pinto beans.
“Investors view land as a potential safe haven resulting in land values 50 percent higher than they were just a short time ago,” said Townsend. “In 1988, a new tractor ran $41,000. Today that machine costs $281,000. Back then, the chemicals we use to protect our crops were $7.00 per acre. Today that product is $30.00 per acre. Our NH3 fertilizer cost has more than doubled over the last 12 months despite decreasing natural gas prices.”
Further, “bulk diesel costs nearly 14 times what it did in 1988. That reality has a significant impact on our operation which relies heavily on trucking to transport our products to market. Those freight costs have doubled in the last year specifically related to increasing fuel costs.”
Townsend rebuked those who say ethanol as the sole reason for increasing food costs. “In reality, as a livestock producer, I understand the impact of the increased corn prices. That’s part of the reason we produce the corn we do, it allows us to feed our stock without entering the market to purchase that feed.
“Ethanol has also provided us with the unique opportunity to incorporate the use of high quality DDGs (dried distillers grain) into our feed cycle. Using the co-product is one of the many ways we can mitigate our costs and remain profitable. In fact estimates show that as much as 60 percent of original corn inputs can be returned as DDGs.
Townsend claimed without ethanol added to the fuel mix “each of us would face gas prices 40 to 60 cents higher at the pump.”
Roberts: “Most folks have no idea a tractor can cost over $300,000. Yet, many believe that the high commodity prices will make up for the rising costs of fuel and inputs. How do you manage these rising costs and keep your balance sheet in the black?”
Through a lot of practice, replied Townsend. “We went through 10 years of drought – 1997 through 2007. In 2002, we had (just over) two inches of rain. … We’re currently having one of the driest springs we’ve had on record. We face tough conditions most of the time. That makes tough people.”
What about the cost of complying government regulations?
Unfunded mandates “affect all of us,” said Townsend. “One of the biggest right now is we have 36,000 gallons of fuel storage and must build facilities. There is some disagreement on whether we must have a $10,000 engineer per site or whether we can do it with a program from the Internet that” explains the same thing the engineer would do.
“The regulations of dust and spray nozzles and the rest of it – stay where your knowledge is at. In our (area), we raise the dust and there’s nothing we can do about that. We’re spraying our crops and saving fuel.
“I kept hours on my tractors. Prior to strip-till and no-till, we used to produce 1,700 gallons of nothing but waste oil. We’re now down to 300 gallons. Our tractors run (fewer) hours, our equipment is bigger and we’re using more chemicals.
“But we don’t need to be regulated for spray drift. We can control spray drift. We know what we’re doing and if we drift on our farm, we pay for it. There is a consequence so we try not to do those things.”
Townsend, called on many times during the hearing, was also queried on the impact of the expanded 1099 requirement in the controversial health care bill. The provision would require companies to report on any purchases of goods or services of over $600.
“Give us a real-life view of how that will impact your operation – if you have to issue 1099s for all goods and services purchased over $600 during any calendar year,” said Nebraska Sen. Mike Johanns.
Along with the 1099s, Townsend derided the health care legislation in general. The Townsend family takes in “several kids and our goal is to teach them a work ethic. Mama takes one and I take one. We try to teach them how to work, teach them management skills, how to use farmland. We try to develop a better person. If we have to insure those individuals, (such mentoring) would be in trouble.
“We have part-time employees. One, we had to report work on for three weeks. He had a job, took vacation, and came to help us with harvest. I’d love to have him back. But are we going to have to insure him, as well?”
As for paperwork, “I probably could make 20 purchases of at least ($600) in any given day.” Providing a form for each “would be an astronomical problem to keep track of.”