Falling red diesel prices help cut farm costs

Falling fuel costs should offer some help for farmers suffering poor farmgate prices. Red diesel prices in the UK ranged between 55-60p/litre at the end of last week (10 October) depending on delivery destination – roughly 10p/litre lower than a year earlier.

The main driver has been sliding world oil values, reaching levels last seen in 2010.

See also: Red diesel rules – everything you need to know

Nigel Collen, business development manager at Mole Valley Farmers’ Mole Fuel Solutions, said lower crude oil prices should feed into red diesel values fairly quickly.

“The market has been extremely competitive over the last 2-3 months through the harvest and cultivation season,” he said.

“It certainly will affect the bottom line. [Farmers] should see a significant reduction in their fuel costs.”

Mr Collen added that recent dry weather would also have cut fuel needs, as fields had not been too sticky and land had turned over more easily during cultivation.

Anglia Farmers chief executive Clarke Willis said liquid fuel prices were 21% lower in the first eight months of the year compared with 2013.

But he said fuel equated to a tenth of a business’ costs, so that could only amount to a 2% saving.

“This is a welcome relief but is not a solution to everything, given some of other challenges around the [farmer’s] cost base,” he said.

The price of Brent crude dipped below $89/barrel at the end of last week and hit a low of $87.74/barrel on Monday morning (13 October).

Director and general manager of Rix Petroleum Duncan Lambert said the USA’s focus on fracking for shale gas had made it more self-sufficient and reduced world demand for fuel.

He said political crises in Iraq and Ukraine were not pushing up oil prices as might have been expected.

“Most supplying countries are finding themselves with an abundance of product and no market to sell,” Mr Lambert said.

“[The UK] buys everything in dollars and the sterling against the dollar is fantastic at the moment.

“We can only see the price holding steady or easing further down – but let’s see how the winter starts.”