The Impact of Higher Energy Prices on Great Plains Crop Farm Expenditures

Use of energy-intensive inputs in agriculture in generally considered to be unresponsive to price increases in the short run. An increase in diesel and natural gas prices directly increases cots of energy used on farms for irrigation, machinery operation, and heating. Energy-intensive production inputs such as fertilizer prices also increase due to higher energy costs. This study assesses the impact of substantially higher energy prices in 2000 and 2001 on whole-farm production costs on 983 Kansas farms using actual whole-farm data. It is hypothesized that the impact on fuel, irrigation energy, and fertilizer costs will be significantly more than the impact on seed and chemical costs. Higher prices for fuel, irrigation energy, and fertilizer in 2000 and 2001 raised production costs and lowered net farm income, depending upon farm type and location by an average of $2,697 to $51,685 below what it would have been without these energy price increases. Dryland farms and irrigated farms are impacted most by increasing fertilizer and irrigation energy costs, respectively, and both kinds of cost increases are due to higher natural gas prices