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Lower energy inputs and the impact on agriculture

Lower crude oil prices should mean lower energy input costs for livestock and crop producers.

Iowa State University Associate Economics Professor Chad Hart says there are short and long term benefits from the slide in energy price, “As we look at input costs, the drop in crude oil should mean lower diesel prices as we look at hauling our crops and livestock around. Longer term, on the crop side, we could see some additional cuts, possibly, in fertilizer prices over time, but those would be much more slow to roll in, in terms of changes in input costs.”

Hart adds lower energy costs will help consumers buy more meat, but may actually have a long term negative impact for some corn and soybean growers, “The longer oil prices stay down, there are some negative impacts for agriculture as well, because they do start to impact the demand for our products, especially on the crop side; biodiesel and ethanol, those margins start to get squeezed under these lower oil prices and that can mean lower demand and possibly lower crop prices as we go forward.”

Crude oil futures Tuesday closed near six year lows.