QUINCY, Ill. — Unrest in the Middle East could affect
agriculture in a number of ways, possibly including the way Illinois farmers
work their land.
That is the view of Scott Meyer, grain merchandiser with
Ursa Farmers Co-op here. Meyer believes that Illinois — already the No. 1
no-till state — could see even more acreage with minimal disturbance.
“If you see things drastically go higher for a prolonged
time, I think you’ll see some more go toward no-till farming,” he said. “In the
central part of Illinois, where you have nice, even dirt, there are a lot of
people who tear it up and work it over two or three times from harvest until the
next spring. And if you see diesel in the $4.50 to $5 range for an extended
period, you’ll see a little bit less of that.”
The news has been dominated in recent weeks by the
insurgence in Iraq led by the jihadist group Islamic State in Iraq and the
Levant, also known as the Islamic State in Iraq and Syria. The lurch toward
civil war in Iraq and the possibility that it could spill over into neighboring
states has launched speculation about what might happen with oil prices.
In the event of a sharp price increase in oil, farmers will
be looking to cut diesel use as much as possible, Meyer believes. That will
likely result in fewer passes across their fields.
“If a farmer wants to save fuel, that’s what it is, with
tillage,” Meyer said. “You have to run the combine, you have to run your
planter. And you’re going to run your sprayer no matter what. But tillage takes
a lot of horsepower and a lot of fuel.”
Despite the threat, things could be worse, said Brad
Richards, vice president of the Illinois Oil and Gas Association. Increased
production of oil and gas at home may soften the blow.
“If not for the resurgence of oil production here in the
U.S., I don’t think it’s hard to imagine that we would have already seen a major
price shock,” Richards said. “As a country, there are a lot of reasons to
support domestic oil production, and this is one of them.”
While the consequences of increased strife in the Middle
East aren’t clear, past incidences have resulted in higher fuel prices. That
could affect rural America in several areas.
“I can’t see how it would be very beneficial to the Midwest
farmer at all,” Meyer said. “As far as the total impact, it’s hard to tell. I’m
guessing it would have an adverse price on raising our fuel at the pump.
“In Illinois, our crop conditions are looking great. We’re
going to have a lot of crop to transport this fall and the rest of next year. I
can’t tell of anybody who benefits from higher gas prices, other than the select
few who take it out of the earth. It hurts all transportation costs and makes it
more expensive for barges to operate. We’re on the Mississippi River, and we
send everything by barge down to the Gulf. It raises the breakeven point for
barge lines and makes it more cost-prohibitive for us to ship down
Higher oil prices would likely be a drag on ag commodity
prices, Meyer added.
Richards sees the possibility of rapidly increasing oil
prices in the U.S., perhaps even to historic levels.
“The question becomes, will we see $150 oil? I would suggest
it is a possibility, but the production here is going to help keep that in check
better than it might otherwise be held,” he said. “My sense is that the price
shocks we’ve seen in the past could easily be seen again, on a percentage basis.
We had $130 oil in 2008 that was at least in part driven to uncertainties in the
Middle East. I think you could see that and more with the severity of what
potentially is going to occur.”
The Legislature passed a bill more than a year ago to
regulate hydraulic fracturing, but action has been on hold because the
rulemaking process has not been completed.
“I think Illinois could be a major part of the drive toward
a more secure energy picture here in the U.S. if we can get off the starting
blocks,” Richards said.