Farm Horizons, December 2012

Fueling the harvest: demand for diesel goes up as fields ripen

By Starrla Cray

As any farmer knows, a plentiful harvest doesn’t happen by accident.

It takes things like careful planning, hard work, good weather, effective equipment, and of course, fuel.

Lots and lots of fuel.

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“Typically, October is the busiest month; we go through about double the volume of a normal month,” said Bill Reimers, general manager of Mid-County Coop in Cologne.

“We do as many as three transports a day in the heat of the season,” added Mike Loscheider, general manager of Waconia Farm Supply. Normally, the company hauls about 1.5 of those 7,500-gallon transports each day.

Each autumn, local fuel suppliers gear up for the spike in demand by upping their reserves.

“We have the benefit of ample storage locally,” Loscheider said, explaining they have room for about 190,000 gallons.

Mid-County Coop also has plenty of space, with four storage facilities.

An eventful season

For many Midwest suppliers, this year was a bit more challenging than in the past.

“Down in the cities, there are several refineries, and one was shut down for a few weeks because of a problem at the terminal,” Loscheider said. “That creates strain on the rest of the system.”

“Part of the problem is, when a refinery closes, people have to go to other supply ports,” Reimers said, explaining that this can lead to long truck lines.

“Drivers could be waiting three or four hours to get product,” Loscheider said.

One way to alleviate this problem is to do pickups at night, when lines are shorter.

“This can help to a certain degree, but all the non-agricultural activity still goes on,” Reimers said, referring to demand from gas stations.

Higher prices

When a refinery closes, it can lead to product shortages and price increases.

From Sept. 20 to Oct. 13, for example, fuel went up 60 cents per gallon.

“It has since stabilized, but we’re still seeing some remaining effects,” Reimers said at the beginning of November.

This year, the highest price increase in one day (Oct. 8.) was 15.22 cents.

“In three business days, it went up 39 cents,” Reimers added.

In addition to demand, fuel prices can fluctuate based on speculative factors, such as weather events and political news.

“It’s impacted so much globally, nowadays,” Loscheider said. “Prices used to change once a day; now, it can be up to four times a day.”

For biodiesel, the market for soybeans is also a factor in increased prices, Reimers added.

“There’s a multitude of challenges,” Loscheider said. “It can be an interesting dynamic.”

“It was more difficult this year, but it helped that harvest was quite a bit earlier this year, so we weren’t crunched for time,” Reimers said.

Loscheider said it’s great when producers communicate their fuel needs ahead of time, so fuel suppliers can plan ahead and manage resources effectively.

“Advance notice is always nice,” he said.

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