Ukraine war: Red diesel prices spiral piling pressure on farm businesses

Farmers are being invited to place firm orders for red diesel without knowing what they will be charged once the deliveries are made.

Questions are also being raised about the rapidly rising cost of red diesel, which seems to be outstripping the price of white diesel since Russia’s invasion of Ukraine sent prices soaring.

Midlands-based arable and dairy farmer Charles Goadby contacted Farmers Weekly after he was asked to pay 112p/litre for red diesel this week.

That compared with the 73p/litre he paid for 10,000 litres of red diesel just 10 days ago – a rise of more than 50%.

There have since been further hikes, with other farmers suggesting they have been quoted as much as 130p/litre.

See also: How Ukraine war will impact its farming – agronomist’s view

Many fuel suppliers have now suspended quoting completely. This is because prices are rising so quickly there is a huge difference between the price at the time of order and delivery seven days later, one supplier told Farmers Weekly.  

This means farmers are having to order without knowing what they will pay at the time of delivery.

Contractors hit

Contractors are also taking a hit, with Mr Goadby’s contractor, Alistair Trivitt, saying he may have to ask farmers to buy and store fuel in advance, before he can commence fieldwork.

Previously, buying a £10,000 load to carry out work for a customer was difficult in terms of having to sustain that cost until payment was received, he said.

But now, with price rise after price rise, that gap could be half as big again, which is difficult for any business to sustain for multiple customers, Mr Trivitt said.  

Both the farmer and contractor also queried why red diesel appeared to be rising faster than white.

A rise from 73p/litre, to the claimed 120p/litre on Monday 7 March, represented a 65% increase over 10 days, said Mr Goadby, while white diesel, even at 172p/litre, had gone up by about 15% over the same timeframe.

Fair price campaign

Campaign group FairFuelUK  has urged the public and businesses to lobby government, demanding at least a 5p/litre cut in fuel duty for road use.

In an open letter, the campaigners urged fuel users to take three steps to press for a reduction in costs.

  • Write to local MPs urging them to call on the chancellor to back an urgent cut in fuel duty of at least 5p/litre
  • Support Robert Halfon’s early day motion call for an independent pump pricing monitoring body to stop fuel companies exploiting the political situation
  • Back the Road Haulage Association’s call for an essential user rebate of 15p/litre

A spokesman for FairFuelUK said: “It really is time the government recognised reducing the cost of living should be its prime focus.

“Cutting fuel duty by at least 5p/litre is morally and fiscally the right thing to do, before pump prices become increasingly unaffordable and debilitating.”

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