FARMERS ARE facing a summer of increased costs and possible protests if fuel prices carry on rising.
Crude oil prices have hit 14-year highs on the back of insecurity in the Middle East, higher demand caused by rapid growth in developing countries like China, lower US reserves and speculation by traders.
Brent Crude was almost $37 a barrel on Weds, May 19, down from its $39 a barrel peak last week (w/e May 14), but still almost 25% more expensive than at the beginning of the year.
The hikes will hit farmers‘ fuel bills directly – red diesel is now about 23p/litre, almost 5p/litre up on the year.
It will also add costs indirectly as any road diesel increases will be factored into delivery and transport costs and some will also be passed back by customers.
Richard Turner, chief executive of the Freight Transport Association, said: “At present, 10% of the price of every product bought in a supermarket is the cost of the transport to get it there.
“If fuel rises by 10p/litre, this will put transport costs up by 5% and, on average, will up the costs of everything by 0.5% in the shops.”
But Mr Hutton reckoned it was likely that retailers would try to pass the costs back down the food chain rather than to their customers.
John Ringwood, product manager at farmer-owned supply co-op ACT, said it was difficult to predict what oil prices would do in the run up to harvest.
“I think I would hedge my bets and buy half now and half later.”