President Donald Trump’s executive order allowing tax-free dyed diesel on roads could help farmers. But an agricultural economist at Kansas State University says the benefit to a typical grain farmer may be limited.
Greg Ibendahl says most of the diesel used by grain farmers is already exempt from the federal fuel tax. The main savings is hauling grain to the elevator.
“So, if you’re just strictly a grain producer during this three-month window, it would probably save you about $100. So, certainly not a big thing for farmers. The real benefits from this are going to be truckers.”
The estimated $100 benefit is much smaller than the savings touted by the White House.
Ibendahl says the order doesn’t address the bigger problem behind today’s high diesel prices, and that’s the constrained supply.
“We have a world problem of lack of supply of diesel right now, and that’s the reason why prices are so high. So, you know, for a number of years now, we’ve been really kind of constrained with capacity here in the U.S. It would be great if we could get a couple more refineries built, which will never happen with all the hurdles you have to jump through to get one done. So, we’ve had that issue going on for a while. Well, this spring, then we suddenly add up the whole Strait of Hormuz, trying to get diesel through that way. But to me, I think the big thing really probably is the whole Russian-Ukraine war.”
And he says there isn’t a quick fix.
It would probably take a good year before things would finally wind back down to where they were pre, like in February-type situations. That would be the best solution. If none of those things happen, you know, six-dollar diesel fuel-that could be the name of the game from here on out.”
For farmers, Ibendahl says that means the fuel bill will hurt this fall — but it may not be the biggest cost problem ahead. He says fertilizer prices could be a much bigger concern next spring.