STERLING, Ill. — Dan Koster has done more strategizing over
heat than Super Bowl coaches do over the big game.
“I think the farm needs will be OK — it’s just a matter of
what price we’ll pay for it,” he said.
Koster heads up a farrow-to-finish hog operation in
Whiteside County. He’s had to do an elaborate dance the past few weeks to keep
his propane tank filled and the pigs on his farm warm.
“For us, two weeks ago the market spiked. It was close to $5
at the terminal, so we had to go outside of the area to get a load. We were able
to get one out of Missouri. Since that time, the market has fluctuated,” he
The price of propane, in limited supply due to a perfect
storm of factors, including some not-so-perfect winter storms and record low
temperatures, has kept the price moving.
“When terminals came off allocation, the price dropped
$2.49, from $4.87 to $2.38. Then it went up $1.87, and now it’s down 47 cents.
It’s been really volatile,” Koster said.
He said he and other producers have worked with suppliers to
“Nobody’s taking on any new customers. We’re relying on our
existing suppliers, and they’re doing only partial fills. We’re able to get a
partial fill, and the price is high — over $4 for a bobtail load and $2.73 for a
transport load,” he said.
Koster said that he’s heard of other producers purchasing
large quantities of diesel fuel heaters for their buildings. But he said the
situation is an example of supply and demand.
“The market is rationing supply so we don’t run out,” he
Over in Indiana, so far, Randy Curless has been able to
bring the heat.
The owner, with his family, of Liberty Swine Farms, a
1,200-sow, farrow-to-finish hog operation, has been able to keep his tiny
charges warm and comfortable despite a lengthy and cold winter, spiking propane
prices and limited supplies.
“So far, we’ve able to get it. They’re not putting more than
200 gallons in a tank, but we’ve been able to call the next week and they come
out and give us another 200 gallons,” he said.
For Curless and thousands of other farmers, particularly
pork and poultry producers, who maintain the safety and comfort of their animals
inside heated barns, keeping propane tanks filled to keep barns heated is a
“It’s vital. I don’t know how we would heat without it. We
talked about alternatives, and there is no natural gas anywhere close to us so
we’re dependent on propane,” Curless said.
“You cannot run out,” said Craig Hill, president of the Iowa
Farm Bureau and a grain and pork producer from Milo, Iowa.
Hill said that while some homes may have alternative heating
sources, such as electric heaters, wood or natural gas, for livestock producers,
propane is vital to farm operations.
“There are very few other means of heating those buildings.
Not only are you consuming a lot of product that is very expensive, you cannot
afford not to have the product,” he said.
Hill said supply management is a top priority and urged
those with very large tanks to resist the urge to fill and hoard propane.
“Managing the supply is critical for producers. If producers
have very large tanks, they do not, for others’ interest, not want to hoard
propane. If you’ve got a 10,000-allon tank, now is not the time to have it
completely filled, shutting off the supply to others,” he said.
Hill said a survey taken by Iowa Farm Bureau indicated that
although producers may be cringing at the pricing of propane, nobody seems to be
unable to get supplies.
“It’s better in some spots. It depends on regional
distribution and how adequately suppliers were prepared for this event. We did
take a survey, and we received a lot of responses. We haven’t had anyone tell us
that they have run out or could not get any level of supply,” he said.
Hill said that natural gas supplies, for those farmers who
also are connected to natural gas, while increased in price, have not had the
supply issues that propane has had.
But price remains a concern as an unexpectedly cold and
snowy winter drags on.
“We have a lot of anxiety particularly over pricing. Five
dollars a gallon is an incredible price, but that pales in comparison to not
having it at all,” Hill said.
The supply and price of propane gas has gained national
attention and headlines in recent days and weeks. Supplies of propane gas have
been limited, and prices of propane per gallon have shot up, putting both
farmers and those who heat homes and other businesses with propane in a tight
For Curless, who contracted his propane earlier in the year,
the price pinch hasn’t been as painful.
“As far as price goes, I had mine contracted, and they are
still honoring the contract, so I’m extremely lucky for that,” he said.
Curless said he has heard of prices around $4 a gallon from
producers who weren’t contracted prior to the winter heating season.
He said that he has made adjustments on his farm to conserve
propane and reduce usage — including cutting the heat back for larger finishing
pigs and making more use of heat lamps and heated mats for piglets.
“In the farrowing rooms and the nursery, there’s not much we
can do. Those little pigs need a certain temperature to perform well. With the
baby pigs and the nursery pigs, they could die if we don’t keep it at 70 degrees
in there,” he said.
Curless said that suppliers are reluctant to give any firm
date on when the tight supplies might ease up.
“It all depends on what the weather does,” he said.
The Indiana Farm Bureau said it is urging members to help
neighbors who may be struggling to heat homes and barns.
“Indiana Farm Bureau is encouraging its members to do what
farmers have always done in times of trouble — reach out across the fencerow and
help out a neighbor. Grain farmers who use propane for grain drying are urged to
check their tanks for any residual fuel. If there is propane left from last
fall’s drying season, contact your neighbors with livestock barns to see if they
are in need. If your neighbors don’t need it, contact your local propane
supplier to see about getting any extra fuel back into the supply chain. There
is definitely someone who can use it,” said Kathleen Dutro, media relations
specialist for Indiana Farm Bureau.
The tight supply situation and high prices aren’t expected
to ease up soon.
The Department of Homeland Security said, in an update
released Jan. 28, that it does not expect an easing up on the U.S. propane
situation before mid-February.
“Little relief is expected for the states experiencing
propane shortages, as unseasonably cold weather is forecast to continue to
affect much of the United States for at least the next two weeks. Additional
regions or states are likely to issue or extend emergency declarations as cold
weather and propane transportation and distribution issues continue,” the
The current propane situation was brought about by several
factors that involve supply, demand, pricing and infrastructure, said Mason
Hamilton, petroleum markets analyst at the U.S. Department of Energy.
“We had a series of logistical supply issues, getting
propane back to the distribution terminals. Before they could resolve those
issues, several waves of cold weather occurred so people began to call their
propane dealers when inventories were already at a low level,” Hamilton said.
Hamilton said a later than normal corn harvest in the
Midwest drew down supplies.
“We had a late cold and wet corn harvest in the Midwest, so
that meant farmers needed to dry their corn. In the first week of November, we
saw two million barrels withdrawn from storage in that first week, in one week.
That was the largest single-week drawdown on inventory in November since the
Energy Information Administration began collecting data,” Hamilton said.
Price competition also contributed to the current situation,
Hamilton said, with propane prices at the Gulf Coast hub at Mont Belvieu, Texas,
being more attractive for propane producers.
“We publish two publications, including This Week In Petroleum. Those tell a
story about how changes in the infrastructure and growth of propane has allowed
propane to flow along pipelines differently. Infrastructure has allowed propane
to go to the Gulf Coast, where they can receive a better price. Conway, Kan., is
the Midwest hub,” Hamilton said.
“The relationship in price between the two hubs determines
which way the propane wants to go. For the past three years, there has been a
better price, a higher price, at Mont Belvieu, so that means propane has wanted
to flow south,” Hamilton said.
The governors of Illinois, Indiana and Iowa have taken steps
to try to ease the propane pricing and supply situation. All three have signed
declarations to waive propane transport rules.
The state leaders have extended emergency fun-ding through
LIHEAP, the Low Income Home Energy Assistance Program, to low-income families to
assist with heating costs.