Agriculture suffers from increased energy costs worldwide. The price of crude oil has risen to a four-year high, which is eroding agricultural incomes, while agricultural commodity prices are low anyway.
On all continents, farmers groan under rising diesel prices. The global benchmark for Brent Crude-Oil was over $ 80 / barrel yesterday. That was the highest price since the end of 2014.
Along with local economic challenges, the price hike is causing problems for farmers around the world to continue making profits. World agricultural production is estimated at $ 2.4 trillion. If the farmers take less, they spend less.
In the US, diesel costs account for 5% of the total costs. This is particularly painful, because the revenue is currently only half as high as in 2013. Huge harvests in recent years have put severe pressure on staple food prices such as corn, wheat and soybeans.
The farmers need diesel for sowing, harvesting and transporting agricultural products. They spend $ 15.25 billion in the US this year. 8% more than last year.
In Russia, diesel prices are 50% higher than a year ago. The production costs have increased accordingly.
In Brazil, diesel prices have increased by 43% since July last year. Farmers have responded by doing less tillage or using less manpower. Ultimately, necessary investment plans are postponed.
In Argentina, farmers are particularly affected by currency weakness as energy prices are paid in US dollars. Because of the large distances in the country to the seaports or the large distance to the buyers on the world market extremely high transport costs arise.
In Europe, farmers are complaining about higher prices for fertilizers and pesticides.
Text: HANSA Derivatives Trading GmbH /
