Harvest headache: diesel price surge hits grain farmers

As the harvest season approaches, grain farmers in rural areas are facing a familiar challenge: soaring diesel prices. With trucking and harvesting operations requiring massive amounts of fuel, the recent surge in diesel costs is putting pressure on farmers' bottom lines.

Trucking business owner Dan Russo described the impact of high diesel prices as "crippling the trucking industry". "You've got 10 trucks taking 1,000 litres minimum each day," he said. "Not to mention the extra repair bills due to the roads, extra running costs, registration, tolls."

Russo's fleet of 13 semi-trailers and road trains operates out of Melbourne, and he estimates that his fuel bill was "just under $400k" in June when fuel hit $3.20 per litre. Although prices dipped in July, they have since risen to $275,000 in August. "Every day I'm getting less and less optimistic … it's very deflating," he said.

Russo warned that if help is not provided, the extra costs will eventually be passed on to consumers. "The more you hit the transport industry, the higher your consumer prices are going to be," he said. "No-one wants to see $10 bottles of milk at the supermarket," he added.

Frustration for farmers

Victorian Farmers Federation President Ryan Milgate said farmers are experiencing "deja vu" as diesel prices rise again. "We're getting a bit of deja vu where the price seems to be heading north again," he said. "It would really, really bite on the bottom line."

Milgate noted that farmers have already faced an expensive sowing season, with high prices for fuel and fertiliser. "We sort of can't get a break here," he said. "We're looking at double the price of diesel that we were paying 12 months ago."

While diesel is the primary fuel for harvesting, Milgate said there are no alternative options. "Diesel is the only option," he said. "I haven't seen pedals on a header yet and I don't really like the concept of that either."

Supply concerns

Simon Barbary, a farmer from Woomelang in Victoria's Mallee, is concerned about fuel prices but more worried about supply. "We've got to have it so unfortunately we're just a price taker," he said. "You can't say no as much as you want to."

Barbary requires around 15,000 litres of diesel to get through harvest, which his on-farm storage can hold. However, he may need to build up his supply, depending on prices. "Low grain prices and high input prices, that's what keeps me up at night," he said.

Global fuel market

Commodity market analyst Andrew Whitelaw said that while fuel continues to be shipped to Australia, the situation is becoming "precarious" due to global supply constraints. "The numbers are still showing pretty strong flows coming into the country," he said. "We're probably about 5 per cent down year on year." However, Whitelaw warned that if supply issues persist, it could lead to concerns about fuel availability.